ORAL ANSWERS TO QUESTIONS

INTERNATIONAL DEVELOPMENT

The Secretary of State was asked—

UN Conference (Poznan)

Peter Lilley: What assessment he has made of the development outcomes of the UN conference in Poznan.

Gareth Thomas: Among the outcomes from Poznan were further agreement to tackle deforestation and the provision of resources to support it; secondly, the launch of an adaptation fund to help developing countries begin to deal directly with the impact of climate change; and thirdly, agreement that serious negotiations to agree a post-Kyoto framework should now begin in earnest in the run-up to next year's Copenhagen summit.

Peter Lilley: I am grateful to the Minister for his reply. Given that the outcome of the Poznan conference represents a watering down of the commitment by European countries to prevent global warming or contributions to it from CO2 and yet the impact of any global warming—we can see this even if we are not climate alarmist, which I am certainly not—will fall most severely on the poorest countries, which have contributed least to the problem, does that not mean that our obligation to help them to adapt to change is increased? Does the Minister agree that the adaptation fund of some €60 million agreed at Poznan was inadequate to the scale of the problem and the obligation we have to the poorest countries?

Gareth Thomas: I agree with much of the right hon. Gentleman's analysis, but not all of it. I do not think that Poznan represents a watering down of Europe's commitment. Indeed, the 2020 package agreed by Europe has helped to encourage a willingness among some of the larger developing nations, and indeed allies in other OECD countries, to negotiate seriously in the run-up to Copenhagen. The adaptation fund is just one part of the response that we need to help developing countries. I agree with him that more is needed, which is one of the reasons why, along with a number of other countries, we have commissioned a much broader piece of work in order to understand just how much additional finance, whether it be from the private or public sector, is necessary to help developing countries to adapt.

Andy Reed: Although I do not completely share the analysis of the right hon. Member for Hitchin and Harpenden (Mr. Lilley) on climate change, I agree that it is important that we play a leading role in ensuring that the developing countries that receive Department for International Development funding see it targeted at sustainable development. Does the Minister agree that programmes such as using hydrogen fuel cells for microgeneration are important for developing local projects in areas where there is no access to electricity in other forms? Will he ensure that every aspect of the work of the Government and the Department is sustainable in the long term to allow those countries to skip a generation in respect of such schemes?

Gareth Thomas: I agree with my hon. Friend about the huge potential that hydrogen fuel cells offer not only the British economy, but the global economy—including the developing countries, too. I recognise the particular expertise in my hon. Friend's constituency on the development of new renewable technologies. I say to him, however, that fuel cells are some way off providing a more immediate solution to developing countries, and there are a range of other renewable technologies that we can help developing countries to deploy. That is one reason why my right hon. Friends the Prime Minister and the Secretary of State have made available some £800 million, housed in the World Bank, leveraging other donor sources of financing to build climate investment funds to help developing countries to move on to a low-carbon path.

Andrew George: Given that 2008 represents the halfway point towards meeting the millennium development goals, why was there no discussion of that issue? We should bear in mind that according to the World Bank, the first millennium development goal—eradicating extreme poverty and hunger in the world's poorest countries—would cost an estimated £30 billion. That is a great deal of money, but it is about the same amount that Wall street and City bankers awarded themselves in bonuses last year. How does the Minister reflect on the abject failure of the United Nations to achieve the first of the millennium development goals?

Gareth Thomas: With all due respect to the hon. Gentleman, we are still some seven years away from the target date for achieving the millennium development goals and there are encouraging signs in many parts of the world that we will achieve both the top-line millennium development goal and a number of others. We are off track on a number of the goals. That is very true, but it is one reason why my right hon. Friend the Prime Minister initiated a high-level event at the UN in September to focus on what else we need to do to get back on track to meet the millennium development goals. The impact of climate change was very much part of that discussion.

Ann Winterton: What effect will the UN climate change conference have on the provision of electricity to Afghanistan, bearing in mind that its one renewable resource, hydro power, cannot be fully utilised because the transmission lines cannot be protected?

Gareth Thomas: The hon. Lady raises a very good question about the general need to support developing countries in getting better access to energy in the first place—it is a real challenge to help people get connected to electricity and other sources of energy—and in accessing low-carbon sources of energy. On her specific question about Afghanistan, we are in discussions with the Afghan Government about how we can help support them to develop more access to electricity and to other sources of energy.

Michael Moore: Oxfam has said that the Poznan conference
	"exposed a shameful lack of progress"
	on climate change. It is not entirely clear how much irony was intended by the Secretary of State for Energy and Climate Change in yesterday's written statement, in which he cited as the main achievement of the conference an agreement
	"to accelerate the pace of negotiations".—[ Official Report, 16 December 2008; Vol. 485, c. 107WS.]
	Given the dismal experience of the Doha trade negotiations, does the Minister agree that a pattern has emerged of a lack of political will among the rich countries of the world, the cost of which is being borne by the poorest people in the world? Is he satisfied by the amount of progress made at Poznan, and if not, what will his Department do now to ensure that we get to Copenhagen and get a deal?

Gareth Thomas: I do not share the doom-laden scenario that the hon. Gentleman has peddled. I think that significant progress was made at Poznan. When the talks were launched in Bali 12 months ago everyone was certain that it would be at least two years before a deal was reached on climate change, but we have seen some of the key building blocks for tackling its impact in developing countries begin to be put in place, such as the adaptation fund that I mentioned earlier and action to tackle deforestation. The Secretaries of State for International Development and for Energy and Climate Change have announced a £100 million contribution to help tackle deforestation and to help with taking a series of additional steps in that regard. What the Government as a whole will do now is work with a range of partners, including G20 colleagues, to establish what further action we can take to increase appetite for the deal at Copenhagen that we all want to see, and build progress towards it.

Andrew Mitchell: When I attended the Poznan conference last week, I was struck by the visible differences in negotiating capacity between the world's richest and poorest countries. Will the Minister examine ways of strengthening the ability of the poorest developing countries to participate in these vital but complex negotiations?

Gareth Thomas: The hon. Gentleman has made an important point about the need for the voice of developing countries to be heard in the negotiations. We are already helping them to ensure that their voice is heard, in the same way as we have during trade negotiations, and we will continue to provide that support. Through our country offices we are working closely with a range of developing countries, both on their domestic programmes to adapt to climate change and on their engagement in the actual negotiations.

Andrew Mitchell: I thank the Minister for his answer, but does he not agree that Britain could do more to help, for example through the Commonwealth? Will he consider again the advocacy fund suggested by my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), which would help the poorest countries to fight their corner in these crucial negotiations?

Gareth Thomas: As I have already told the hon. Gentleman, we are holding discussions with a range of developing countries about how we can help them to engage in the negotiations. We will have further talks with them through the Commonwealth and a range of other organisations. I would take his question a little more seriously if his party had not just announced its commitment to slashing public spending. That would potentially have very serious consequences for developing countries, not least in respect of their ability to adapt to climate change.

Zimbabwe

Stephen Crabb: What recent assessment he has made of the humanitarian situation in Zimbabwe; and if he will make a statement.

Nicholas Winterton: What assessment he has made of the humanitarian situation in Zimbabwe; and if he will make a statement.

Douglas Alexander: The humanitarian situation in Zimbabwe continues to deteriorate. Thousands have been hit by cholera and hundreds have died. Basic services have collapsed, and the health services can respond only because of the help that we and others are giving. Five million people need food aid, and more disease outbreaks could be on the way.

Stephen Crabb: Contrary to the delusional statements of Robert Mugabe, there is a real and ferocious cholera epidemic in Zimbabwe which is killing children and entire families at this moment. What steps is the Secretary of State taking to ensure that genuinely independent non-governmental organisations receive additional resources so that they can provide urgently needed humanitarian assistance? Will he also ensure that no British taxpayers' money goes into Robert Mugabe's corrupt central bank? Contrary to assurances given at the last International Development questions, United Kingdom taxpayers are supporting the Zimbabwean Government via the global fund.

Douglas Alexander: There is unanimity throughout the House about the scale of the outbreak. There are about 20,000 suspected cases of cholera, and there have been about 1,000 deaths. I have announced a package of support worth up to £10 million specifically to deal with cholera. We predicted that, tragically, this was a likely consequence of Mugabe's grotesque misrule of the country, and we had therefore already worked with other international agencies to stockpile the necessary resources on the borders of Zimbabwe. We continue to work with the United Nations and UN organisations including the World Food Programme, and I can assure the hon. Gentleman that those efforts to address the great humanitarian need are unstinting.

Nicholas Winterton: The Secretary of State will know that extreme hunger and malnutrition are gripping that country. Save the Children estimates that it is feeding 700,000 people, and as the Secretary of State has said, 5 million people are starving. Cholera is spreading, democracy is dead and violence is now endemic in that country. Will the Secretary of State seek to persuade the Leader of the House to provide a debate in Government time on this crisis, so that Members on both sides of the House can express their views and say what action they believe the United Kingdom must take?

Douglas Alexander: I am always happy to pass on Members' concerns to the Leader of the House, and I will do so on this occasion. Of course, we recently had a foreign affairs debate in the Chamber, in which I understand that a number of Members raised the very real concerns felt in all parts of the House on Zimbabwe. The hon. Gentleman is right in recognising the scale of the hunger crisis now afflicting Zimbabwe. The estimate is that by the end of this month about 5.1 million people will be reliant on external food aid—this is in a country that has historically been seen as the bread basket of Africa. That figure alone should challenge not only the international community to continue its humanitarian efforts, but those within Zimbabwe who regard the current position as sustainable. We have been at the forefront of international efforts in calling for the will of the Zimbabwean people to be reflected in their Government, and we continue to make that case.

Russell Brown: How much of the humanitarian assistance being offered by the UK Government is available through partnership working with the Foreign and Commonwealth Office?

Douglas Alexander: I can assure the House that we are working very closely with both our diplomatic representatives in Zimbabwe and with colleagues in government. In recent days, I have chaired a Cabinet Sub-Committee, which both the noble Lord Malloch-Brown and the Foreign Secretary attended. Lord Malloch-Brown was in South Africa on Friday, holding talks with the President of the Republic of South Africa; the Foreign Secretary was in New York on Monday, engaged in further discussions at the Security Council; and I can assure the House that there is constant daily contact between the Foreign Office and the Department for International Development, as together we do what we can to address what is a dreadful situation in Zimbabwe.

Lindsay Hoyle: What Christmas message can my right hon. Friend send to the people of Zimbabwe who are starving and dying of cholera?

Douglas Alexander: The message is that the British Government will continue to provide food, drugs and any assistance we can to address the crisis afflicting their country, but that we also recognise that humanitarian support is not enough. Whether in the councils of the European Union, the Security Council or our discussions with regional partners, we will continue to make the case that the people of Zimbabwe need and deserve a Government who represent their will.

Malcolm Bruce: Does the Secretary of State share my disappointment that so many of the leaders and so much of the media in southern Africa seem to regard the collapse of Zimbabwe and the outbreak of cholera as some kind of European plot, even though the situation is spilling over into their own economies? What can he do to ensure that they understand that resolving the crisis in Zimbabwe is essential not only for the people of Zimbabwe, but for the development of the entire region of southern Africa?

Douglas Alexander: As is so often the case, the right hon. Gentleman brings great authority to his observation on the regional consequences of the crisis that is contemporary Zimbabwe. It is the case that Robert Mugabe has repeatedly sought to portray this as some kind of conspiracy of neo-colonialism, when nothing could be further from the truth. The responsibility for the grotesque misrule of Zimbabwe rests squarely at the door of Robert Mugabe and those in his Government. We in the international community are clear that the strongest voices that can be raised for change are those of the people of Zimbabwe in alliance with regional partners. The cholera outbreak alone gives credence to the claim that if this issue is not addressed the regional consequences will be dire, and that is why we have been working so closely to encourage South Africa to speak up, as well as other regional partners, such as Botswana and other neighbours of Zimbabwe. We will continue to make that case to regional partners.

Alistair Burt: Sadly, it seems clear that any end of the counterfeit President's rule in Zimbabwe will not come about through a negotiated process, and that it will probably come about through a sudden and dramatic event leading to chaos. Is the Secretary of State reassured that if that happens, contingency aid is ready to go to Zimbabwe immediately, because the people of that country will need help and support within hours, not days or weeks?

Douglas Alexander: First, it is, of course, a matter for the Movement for Democratic Change, which bravely stood up against the intimidation and thuggery that it faced in the elections on 29 March, to judge what is the best strategy to take forward. The possibility of a negotiated way forward was established in September, but tragically it appears once again as if ZANU-PF and Mugabe have rejected that way forward for their country. We continue to talk to regional partners and those within Zimbabwe who have the best interests of the people of Zimbabwe at heart, but we also have contingency plans in place so that if there is a credible prospect of recovery, we and other members of the international community will assist in that endeavour.

David Simpson: The recent cholera outbreak is only the latest humanitarian tragedy to strike Zimbabwe and its people. Does the Secretary of State agree that the greatest single positive action that would bring the greatest benefit to Zimbabwe would be for the curtain finally to be brought down on the years of the Mugabe regime and on its systematic rape of its own country and impoverishment of its own people?

Douglas Alexander: The British Government have been forthright in their view of the unwillingness of Robert Mugabe to allow the will of the people of Zimbabwe to be expressed in government. If I appear circumspect, it is for the reason that I gave earlier: that nothing would suit Robert Mugabe more than to be able to ignore the voices of his own people and others within Africa and somehow suggest that this was a British plot. That is frankly not the case; the people of Zimbabwe have spoken, including in the elections earlier this year. It is now for Robert Mugabe to recognise the clear voice that was raised for change within Zimbabwe.

Alan Beith: What hope does the Secretary of State have that help in dealing with cholera can get to those communities, both urban and rural, that are regarded by the Mugabe regime as most hostile to it? Would not the President's insistence that there is no cholera rank in most countries as a basis on which he should be removed from office and probably certified?

Douglas Alexander: First, on the scale of the cholera outbreak, it is affecting almost every part of Zimbabwe now. Tragically, there is no distinction between urban or rural communities; they are all increasingly affected. We are working closely with the World Health Organisation, and I can assure the right hon. Gentleman that the international community is doing the best it can to ensure that the response is being dictated by the epidemiology and the needs of responding to the disease, rather than by any political partiality of the regime in power at the moment.

Overseas Projects (Joint Strategic Priorities)

Mark Pritchard: If he will hold discussions with the Secretary of State for Foreign and Commonwealth Affairs to agree joint strategic priorities for his Department's overseas projects.

Douglas Alexander: Whether in relation to international poverty reduction, conflict or climate change, the Department for International Development works closely with the Foreign and Commonwealth Office and other Departments. We also co-operate closely in implementing our strategies and delivering our programmes, particularly in fragile states and insecure environments.

Mark Pritchard: At a time when the Foreign Secretary is talking about peace and reconciliation in the middle east, why is the Department for International Development still funding some teachers in the Palestinian territories who do nothing more than teach discord, rather than harmony?

Douglas Alexander: In the past week, we have welcomed Prime Minister Olmert and Prime Minister Fayyad of the Palestinian Authority to the United Kingdom. Our continued support for the Palestinian Authority reflects the fact that in our dialogue with the Israelis and others there is a clear recognition that if the Annapolis process is to be taken forward, there needs to be a credible negotiating partner with whom the Israeli Government can negotiate. At the same time, we are keen to see basic services provided to what is often an impoverished population within the Palestinian Authority areas.

John Battle: In his discussions with other Departments, will the Secretary of State ensure that in the strategic priorities, the devaluing of sterling is taken into account, because it is in danger of undermining what has been an enhanced and immensely successful international programme? It is estimated that the value could be reduced by 25 per cent., and it is obviously crucial that the poorest in the world do not pay the highest price for the current economic crisis.

Douglas Alexander: Changes in levels of different currencies are only one of the aspects of the global financial crisis that are affecting developing countries. Those countries have also been vulnerable to changes in oil prices, in the availability of credit and in basic food supply. That is why we are working so hard to ensure that we reflect the contemporary vulnerabilities of developing countries and why we are committed to meeting the pledges that we have made in relation to international development spending.

Andrew Murrison: To what extent does the Minister believe that the International Development Act 2002 has led to a misalignment of our overseas development effort with our overarching foreign policy goals? For example, he may be aware that the FCO dispenses aid to tackle the radicalisation of young men in Pakistan and Afghanistan, but that DFID refuses to get involved on the grounds that that does not constitute development.

Douglas Alexander: I believe that the 2002 Act enshrined in law changes that have been vital to the establishment of global leadership by this Government in the field of international development. I can assure the hon. Gentleman that we are working closely with our colleagues in the Foreign Office and in Afghanistan and other areas of the world, but if he is proposing that his party will tie the aid that was untied by this Government, break our commitments or change DFID from being a separate Cabinet-level Department, he might wish to discuss that with his Front-Bench colleagues.

John McFall: At a recent Downing street reception, the Prime Minister mentioned that in these difficult economic times we have to consider the people in the developing world. Will the Secretary of State reaffirm our commitment to the UN aid target of 0.7 per cent. of GDP and its maintenance through these difficult times?

Douglas Alexander: As recently as September, the Prime Minister reaffirmed his commitment to the goals that we have set in relation to international development. The World Bank has estimated that in the course of the last year 100 million more people have been pushed into poverty by the global economic crisis. That is why it is important not only for the British Government but for other international partners to meet their aid commitments. Given the slashing of public expenditure that the Opposition now anticipate, I hope that they will at least join us in making this commitment.

Mark Lancaster: The stabilisation aid fund was set up to help to deliver strategic projects in Iraq and Afghanistan. Despite the Secretary of State's commitment to transparency, his Department appears either unwilling or unable to give details of projects completed to date. Can he reassure the House and set out the principles under which funds are allocated to projects from the SAF?

Douglas Alexander: The stabilisation aid fund is obviously reflective of its joint ownership by DFID, the FCO and the Ministry of Defence. It reports directly to the National Security Committee, chaired by the Prime Minister. In assessing applications to the fund, we work in close harmony with other Departments, and it is on that basis that allocations have been made.  [ Interruption. ]

Mr. Speaker: Order. Could the House come to order? We are still on International Development questions.

South Africa (HIV/AIDS)

David Burrowes: What assessment he has made of the effect of recent political developments in South Africa on policy to tackle HIV/AIDS in southern Africa.

Gareth Thomas: There has been a marked change in language on policy to tackle HIV/AIDS in South Africa since the appointment of Barbara Hogan as the new Health Minister. We welcome in particular the launch of a major public awareness campaign on 1 December and the announcement of plans to scale up prevention of mother-to-child transmission services.

David Burrowes: No doubt responsibility for the 10 wasted years of HIV denial, and its effect on some 1.5 million orphans, lies squarely on the shoulders of the South African Government, but what is the Minister's judgment on the Department's influence, given its significant presence in South Africa during those years and given that in other so-called middle income countries such as Brazil, Botswana and India the Foreign Office has taken the lead in the light of their epidemic HIV incidence? Are the prospects of influence better or worse?

Gareth Thomas: I agree with the hon. Gentleman to the extent that Barbara Hogan represents a breath of fresh air in South Africa. We are seeing an end to the culture of denial about HIV and AIDS in South Africa that is extremely welcome. We have sought to get behind the public awareness campaign that Barbara Hogan has launched, and the scaling up of mother-to-child transmission prevention services, by committing some £15 million in a new programme announced by the Under-Secretary of State for International Development, my hon. Friend the Member for Bury, South (Mr. Lewis), in a recent visit to South Africa.

Greg Mulholland: Thirty-three million people in the world have HIV, yet only one in three has access to the medicines they need to keep them alive. The Minister knows well that one of the biggest problems is the cost of medicines. What progress has he made regarding discussions on the concept of the patent pool, whereby pharmaceutical companies would create generic copies and be paid a fair royalty so that people could access the medicines that they desperately need?

Gareth Thomas: The hon. Gentleman may know that under the TRIPS—trade-related aspects of intellectual property rights—agreement of 2003 there are arrangements for developing countries to access generic copies of drugs. We have sought to encourage that process. We need to see better access not only to first-line anti-retroviral drugs but to second-line and third-line anti-retroviral drugs to deal with the more complex strains that occur when people are developing a resistance to the drugs. We will continue to work with pharmaceutical companies and a range of other players to achieve that end.

PRIME MINISTER

The Prime Minister was asked—

Engagements

Brian H Donohoe: If he will list his official engagements for Wednesday 17 December.

Harriet Harman: I have been asked to reply. As the House will be aware, my right hon. Friend the Prime Minister is in Iraq today. He will make a statement to this House on his return.
	I am sure that the whole House will wish to join me in sending our profound condolences to the family and friends of Lieutenant Aaron Lewis, of 29 Commando Regiment Royal Artillery, who was killed in Afghanistan on Monday. To those who never shy away from danger and who never shirk from their duty, to the families who will be apart from our troops this Christmas and to those who have died in the service of their country, we owe an enormous debt of gratitude.

Brian H Donohoe: I thank my right hon. and learned Friend, and may I associate myself with those condolences?
	At a time when the price of a barrel of oil has sunk like a stone, why are the energy companies charging the price that that they are for fuel? Surely it is time for more to be done by the Government and those associated with us to bring down the price. Will my right hon. and learned Friend assure me that she can make it possible for me to go back to my constituency and give the assurance that the Government are doing all they can to bring about lower energy prices?

Harriet Harman: I absolutely agree with my hon. Friend. The energy companies must pass on the price cuts to consumers, both businesses and families. They must also treat all consumers fairly. If they do not, it will not just be Ofgem and the Competition Commission that they will have to worry about—we will change the law to force them to do it.

William Hague: I join the Leader of the House in paying tribute to Lieutenant Aaron Lewis, who was killed in Afghanistan on Monday. As she said, our thoughts are with his family at this desperately sad time.
	We look forward to the Prime Minister's statement tomorrow about the withdrawal of British troops from Iraq, although we were surprised that since that news relating to national security was leaked by the Government last week no one has been arrested. Across the House, we salute the work of the British forces in Iraq. They will have been there for more than six years, which is a deployment longer than the entire second world war. As we welcome the end of that deployment, is it not now finally time for the Government to establish what the whole nation expects to see—a full-scale independent inquiry into the origins and conduct of the war?

Harriet Harman: I agree with the right hon. Gentleman's supportive words for the work of our troops in Iraq. We have had a number of inquiries into Iraq and the Prime Minister has said that there will be no further inquiries until our troops are all returning home. The Prime Minister will make a further statement to the House tomorrow.

William Hague: Well, the troops are now going to be returning home and it is time for the announcement to be made. The Government have delayed for years the establishment of an inquiry. The learning of lessons that may be relevant to Afghanistan and elsewhere can no longer be delayed.
	New figures this morning show a further rise in unemployment of 137,000. It is now at its highest level for 10 years and is obviously set to rise further. We have been pointing out that the big problem is that even viable businesses cannot get the loans that they need. Last week, we asked the Government to look again at the bank rescue package. The Chancellor announced on Monday one of the measures that we have been calling for. Will the Government now accept the urgent need to get money into the hands of the businesses of this country?

Harriet Harman: I want to reinforce to the right hon. Gentleman that there is no delay in an inquiry. We have made it clear that, while our troops are still in Iraq, which they are, and doing their duty, we will not have a full inquiry into how they went in; we will not have that until after they return. We have to respect the fact that our fighting forces are still in Iraq. There is no delay.
	As far as unemployment is concerned, it is always a terrible blow for a person to lose their job. That is why we are stepping up Government action with a £1.3 billion package to protect people who become unemployed. The package will help them to obtain the skills to get new jobs and it will also make sure that they do not lose their homes.
	The right hon. Gentleman is right that small businesses are the lifeblood of enterprise and employment in this country. That is why we recapitalised the banks to stabilise the banking system, and that is why in January we will set up a new small business loan guarantee scheme. Although the figures are starting to show increasing lending to small businesses, some businesses are still having problems. That is why the national lending panel has been established.

William Hague: But things are getting harder for households and businesses that want to borrow, not easier. This country has now been in recession for six months, and a leading Minister said this week that we are
	"facing a recession deeper than any that we have known".
	Is it not clear that the Government's policies have failed so far? People are losing their jobs by the hour, and the small business guarantee scheme to which the right hon. and learned Lady referred covers only one fifth of 1 per cent. of business loans. Do we not now need a national loan guarantee scheme of the kind that we have advocated, before more businesses go to the wall and many more tens of thousands of people are made unemployed?

Harriet Harman: We are taking action to protect people who become unemployed. Do the Opposition back the £1.3 billion extra that we are putting into jobcentres? No. They have said that they will cut public spending, and they opposed our action to recapitalise the banks.
	As far as unemployment is concerned, we agree that losing one's job is a terrible blow for every individual. That is why we are taking the action necessary—although unemployment is still about 600,000 lower than it was when we first came into office.
	The Opposition's so-called national loan guarantee scheme is not a guarantee of anything to anybody. If it is not backed up by public money, it is not worth the paper that it has been press-released on.

William Hague: This side of the House did not oppose the recapitalisation of the banks, so let us put that straight.
	Will the right hon. and learned Lady confirm that, of the £158 million announced today to help unemployed people, £58 million has been taken from another programme that is already supposed to help train people? The other £100 million is exactly what she announced two months ago, the last time that she and I did Prime Minister's questions. That money has been announced before, which means that this is a reannouncement of a reannouncement—at Christmas time we are not meant to get only repeats, but that is all that we are getting from the Government today.
	The Governor of the Bank of England himself said on Monday that there has been a
	"further tightening in the supply of credit to households and businesses which is likely to continue...Additional measures...will probably be required to underpin lending to households."
	This House will not sit for nearly a month. How many more people will lose their jobs while the Government dither about introducing the scheme? Why does the right hon. and learned Lady not tell the Chancellor to pull his finger out and introduce it?

Harriet Harman: But the Conservatives would not back the £1.3 billion extra that we are putting into jobcentres to help people with retraining and job advice or, crucially, the money that we are putting in to back people up if they become unemployed so that they do not fear that they could lose their home. Not only are the Conservatives failing to back the action that we are taking to support people who become unemployed, but last week they announced a policy that would make matters worse. They said that at this crucial time they would cut public spending. If they cut vital public investment it will be devastating for the construction industry, jobs and the infrastructure of our country. First they said, "No action" and now they are suggesting action that would make matters even worse.

William Hague: We are calling on the Government to take action; this is a say anything, spin anything, achieve nothing Government and we are calling on them to take action. The director general of the CBI said:
	"Getting the credit markets working properly is much more important than the fiscal boost."
	The CBI survey of distributive trades, released in the last hour, which is the key indicator of activity in the retail sector, and includes the 10 days after the VAT cut, shows the worst downturn in retail activity since records began—a massive thumbs down from the consumer. Is it not time for the Government to concede that the temporary reduction in VAT, universally derided at home and abroad, has not been the answer, and that getting credit moving to businesses would be part of the answer to this recession?

Harriet Harman: I think that there are two responses that we should have to the very difficult economic circumstances. The first is not to talk down confidence and not to talk down the economy. The second is to ensure that as well as interest rate cuts we have a fiscal boost to the economy. Since we are talking about retail, that is why we are taking forward a cut in VAT and we urge the right hon. Gentleman to vote for it. That is why we are bringing forward extra cash help for pensioners from the beginning of next year. That is why we are bringing forward extra child benefit, to put more money in people's pockets, and why we will have a tax rebate to help 22 million people. We take action while all the Conservatives do is carp and criticise. For the right hon. Gentleman to face these big economic circumstances and say, "It is only down to interest rate cuts and we would put no extra money in the economy" would make a difficult circumstance a disaster.

William Hague: What we are calling on the Government to do is to get the money to the businesses of the country. We cannot have lectures about talking down confidence from the Cabinet, one of whose members said this week that we are
	"facing a recession deeper than any that we have known".
	What is that if it is not talking down confidence? This country has been in recession for six months. The Government have achieved nothing except to let unemployment get worse and debt go up. We now have soaring unemployment, rocketing debt, good businesses going to the wall and heavy tax rises on the way. If this is the Prime Minister saving the world, God help us when he moves on to the rest of the solar system. How many people will have to lose their jobs before the Prime Minister justifiably loses his?

Harriet Harman: We would rather have Superman leading our party than have a party led by a joker.

Hon. Members: More, more.

Mr. Speaker: Order. I think the Leader of the House wishes to continue.

Harriet Harman: When it comes to party leadership, I happened to be having a look at the right hon. Gentleman's website, and I suggest that other hon. Members look at it. On williamhague.org.uk, it just says:
	"William Hague...Leader of the Conservative Party."
	The country faces unprecedented economic circumstances. There are uncharted waters ahead and there is economic uncertainty, but one thing I want everybody to be in no uncertainty about is that we will take the action necessary to stabilise the economy, to support small business, to support jobs and to protect people against repossession. Unlike the Conservatives, who simply say "No action" and then propose a bogus scheme, we will never say that unemployment is a price worth paying.

Hon. Members: More.

Mr. Speaker: Order.

Judy Mallaber: Last Sunday marked 90 years since women first voted in UK elections on 14 December 1918. Will my right hon. and learned Friend ask the Prime Minister to join us at the new permanent exhibition on the suffragette struggle, off Central Lobby, and so give a lead to other hon. Members to take their constituents and visitors, particularly school parties, and to stress to young women the importance of exercising their hard-won, democratic right to vote?

Harriet Harman: I will recommend my hon. Friend's request to the Prime Minister, and I congratulate her on the work that she has done to bring the exhibition to the House. The important thing is not only to have more women in the House of Commons, but that we change the face and the agenda of the House of Commons, and we have done that with new Sure Start centres, with maternity pay and leave and with new laws to tackle domestic violence. She is part of making sure that we deliver for women in this country. We are not complacent; there is more to be done.

Vincent Cable: May I add my condolences to the family of the brave serviceman who died in Afghanistan?
	When the Leader of the House last stood in at Prime Minister's questions, I asked her about the vicious spiral that was developing in the economy, with rising unemployment and a collapsing housing sector. Since then, it has been confirmed that housing starts this year are at the lowest level since Ramsay MacDonald led a Labour Administration in 1924.

Chris Ruane: Were you a Member then?

Vincent Cable: Labour Members ought to remember, because they are in danger of repeating that history. The Leader of the House may not be aware either that, a few days ago, the regulator of the housing associations warned that six of the leading associations are in grave financial difficulty and in danger of collapse. What are the Government proposing to do about it?

Harriet Harman: We are very concerned about the housing situation, and that is why we will bring forward capital investment, rather than cut it or postpone it. We will be backing up the Housing Corporation, and for those people who fear that a temporary fall in their incomes will cause them to risk losing their homes, we are making arrangements for them to be able to defer their mortgage interest payments, and those who lose their jobs will not have to wait 39 weeks to get their mortgage interest paid; they will be able to get it paid after 13 weeks. We are very concerned about housing, and we will do everything that we can to protect the housing market.

Vincent Cable: Basically, that was a complacent answer—does the Leader of the House not realise that the investment is not happening, because the housing associations are bust and the Treasury is imposing a crippling funding formula on them? The housing repossession policy is reaching fewer than one in 10 of people in housing arrears. Will she now give the same attention to the financial crisis in the housing associations as the Government are giving to the banks? Will she tell us which of them are in grave difficulty and what the Government are going to do to rescue them and to ensure that the public sector can play a role in kick-starting the moribund housing activity?

Harriet Harman: We agree that the public sector has an important role to play in capital investment in the construction industry in the housing market. We took the action that we did on the banks so that they can be in a position to start lending again into the mortgage market and to stabilise the housing market for the future.

Andrew Dismore: Recently, a small group of people with learning disabilities and their support workers went to a karaoke night at the Bull and Butcher pub, Whetstone. The manager was hostile, made it clear that he did not want them there and harassed them until they left in distress. Does my right hon. and learned Friend agree that such an appalling case of discrimination and infringement of human rights demonstrates the need for both the UN disability rights convention and the Human Rights Act 1998, and the need to build on its protections, not to repeal it, as the Conservative party would do?

Harriet Harman: I agree with my hon. Friend that discrimination against anyone is unacceptable and discrimination against disabled people has no place in our modern society. He is right to bring that matter to the attention of the House. I know that as an avid champion of human rights, he will ensure that justice is done for his constituents, and I can confirm that we remain proud of the Human Rights Act and stand by it.

Nigel Waterson: Many pensioners will bear the brunt of this recession, but with interest rates heading towards zero, will the Leader of the House do something to tackle the nonsense whereby pensioners are assumed to earn 10 per cent. on their savings when it comes to calculating their entitlement to benefit?

Harriet Harman: We are paying extra money to pensioners, with an extra Christmas bonus— [ Interruption. ] Well, I think that the extra winter fuel payment is important, the extra Christmas bonus is important, and bringing forward the increase in the state retirement pension to the beginning of the year is important. While we are in no way complacent about people's income in retirement, the single group of people who have benefited most in terms of their increased standard of living since Labour came into government has been pensioners, particularly single older pensioners.

Laura Moffatt: What does my right hon. and learned Friend think of the decision of Crawley borough—a Conservative-controlled authority—to reject the free swimming offer for young and older people? With the Olympics looming, and with a focus on health and well-being, does she believe that that decision is wrong? Santa will not be coming to Crawley this year.

Harriet Harman: That is just another example of how the Tories do not believe in public services, even important public services. They should be jumping at the chance of free swimming, which is important for people of all ages, not only for leisure but for public health. I hope that Crawley council will take my hon. Friend's advice and think again.

Elfyn Llwyd: Given that the troops have been in Afghanistan for more than seven years, and looking at the current situation, including the deeply entrenched forces around Kabul, would the Leader of the House care to speculate on whether the military battle is being won, and crucially, when does she anticipate that the all-important battle for hearts and minds will commence?

Harriet Harman: We have always said that there is a development strategy, a political strategy and a military strategy. In that military strategy, as well as paying tribute to our troops fighting in the most dangerous circumstances in Helmand province, we recognise that this is a multinational force operating in Afghanistan. Of course, we recognise the political and development strategies as well as the military one.

Brian Jenkins: May I ask my right hon. and learned Friend to pass on my thanks, and the thanks of many in this House and in our country, to everyone involved in last week's announcement on the upgrading of the armed forces compensation scheme? She will realise that that will make a massive difference to the quality of life for service personnel and their families. However, can she assure me that everything is being done with regard to the fixtures and adaptations that service personnel need to make a smooth transition when they return home from rehabilitation?

Harriet Harman: I support my hon. Friend's welcome for the increase in compensation for those who have suffered injuries in service to their country—an increase of up to £590,000. In addition, that will be backdated to those who have been injured since 2005, and instead of waiting for them to contact the compensation scheme they will be contacted for their compensation level to be reviewed. He mentions the important question of adaptation. Those who are returning home will have high priority for adaptations in their homes.

Mark Pritchard: This week, the Government abandoned their planned inquiry into the use of Snatch Land Rovers in Afghanistan and Iraq. Given the increasing number of improvised explosive device attacks, why are the Government still unprepared to give our armed forces the level of protection that they need, want and deserve?

Harriet Harman: We are committed to doing exactly that. The Secretary of State for Defence has said that he will listen to and be advised by the military chiefs so that they have the full range of equipment that they need to support our troops in the field.

Julie Morgan: Many of my constituents in Cardiff, North, have benefited from the opportunity to work flexibly that was introduced by this Government, who have recognised the stresses and strains of bringing up a family while having to go to work—something that has not always been recognised by the Opposition. Will the Leader of the House tell us when that opportunity will be more widely extended, and what the timetable is for doing so?

Harriet Harman: I pay tribute to my hon. Friend, who has long championed the cause of families, and who has pressed for support for families who juggle going to work, bringing up children and caring for older relatives. People want to be able to earn a living and support their family, and that is why we introduced a right to flexible working—unfortunately, the Opposition opposed it—for families with children up to the age of six. I can confirm that from April, we will be increasing that right to request flexible working, extending it to all families with children up to the age of 16.

Richard Bacon: Statutory arrangements for the improvement of the governance of the National Audit Office were to have been included in the constitutional renewal Bill, but as the future of that legislation is currently unclear, does the right hon. and learned Lady agree with the right hon. Member for Swansea, West (Mr. Williams), who has written to the Prime Minister on the issue, that it might be simpler and more sensible to have a separate, stand-alone Bill, that makes sure that the future of the National Audit Office is safeguarded? Will she talk to the Prime Minister—and to herself, in her capacity as Leader of the House—about that?

Harriet Harman: I agree with the hon. Gentleman about the important work of the National Audit Office. He will know that in the Queen's Speech, we said that we would continue discussions and consideration of how we can improve and modernise the constitution.

Nick Palmer: Some years ago, I was able to persuade the then Minister to refuse support for a damaging open-cast mining project in Cossall in my constituency. Constituents there were extremely pleased with the move away from the Conservative policy of doing nothing and letting the project happen. I want to ask my right hon. and learned Friend whether it remains the Labour Government's policy to refuse support for open-cast mining where it would have a disproportionate impact on the environment.

Harriet Harman: I can reassure my hon. Friend that there has been no policy change on open-cast mining, and I am sure that he will pass that message on to his constituents, who will continue to be happy with his work as their MP.

Shailesh Vara: In his speech to the Labour party conference in 1996, the Prime Minister said:
	"we will not build the new Jerusalem on a mountain of debt".
	Why have the Government changed their mind?

Harriet Harman: One of the biggest misapprehensions that the Opposition have been peddling is on the question of debt, and I want to address that. When we came into government, our debt as a percentage of gross domestic product, according to the International Monetary Fund figures, was 43 per cent. We paid that off year by year, taking it down to 37 per cent. We acknowledge that now we need debt to rise; we do not resile from that. If debt is not allowed to rise, and we cannot take the action that is necessary to back up the economy, there will be even more debt in the longer term, as a result of the bills for failure and for unemployment benefit. How can the hon. Gentleman's party put forward proposals for a so-called national loan guarantee scheme while saying that it would cut public spending and not allow debt to rise? It simply does not add up.

David Crausby: Will my right hon. and learned Friend make sure that pressure is exerted on private water companies, which are imposing new surface water charges on churches, and treating them as if they were businesses? If those companies are not prevented from applying those unfair charges, which amount to thousands of pounds per church, they will be responsible for the closure of places of worship across England and Wales.

Harriet Harman: My hon. Friend raises a point that has been made by a number of hon. Members; indeed, the matter has been raised with the Church Commissioners. I know that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs is reviewing the situation, and I will ask him to write to my hon. Friend, as well as to the Church Commissioners.

John Leech: In west Didsbury, Lancastrian school is to lose its secondary provision, and Ewing school, which has won awards for inclusion, is earmarked for closure. Those schools provide top-quality teaching and learning for children with physical incapacities and speech and language disorders, who cannot be educated in the mainstream. Will the Leader of the House join parents, teachers, local residents and me in urging the council to reject those unpopular and unnecessary plans?

Harriet Harman: The question of local school organisation is a matter for the local education authority, but I will draw the hon. Gentleman's comments to the attention of the Secretary of State for Children, Schools and Families. I hope that the hon. Gentleman will welcome the fact that in his area there has been a very big investment in teaching and in school buildings.

Adrian Bailey: The Building Schools for the Future programme is vital for improving the educational prospects of young people in my constituency and for sustaining and maintaining the construction industry at an extremely difficult time. Can my right hon. and learned Friend tell me what steps are being taken to accelerate that programme?

Harriet Harman: My hon. Friend makes a fundamental point that the refurbishment and rebuilding of schools is not only important for education, but vital to keep jobs flowing in the construction industry. To cut back Building Schools for the Future now would deprive local communities of the improved schools, as well as being a devastating blow to the construction industry. That is why, far from doing that, we will bring it forward.

Speaker's Statement

Mr. Speaker: Several right hon. and hon. Members have raised with me the matter of the search of a Member's office. The House has recently come to a decision that the matter should be considered by a specially appointed Committee. The House has also determined that the Committee must not in any way prejudice any police inquiry or any potential criminal proceedings. There is, therefore, not yet a basis on which to nominate that Committee, since consideration of criminal proceedings is still under way.

Pitt Report

Hilary Benn: With permission, I shall make a statement on the Government's response to Sir Michael Pitt's final report on the floods of summer 2007.
	Last weekend's flooding in the south-west, in which two people sadly died, reminds us of the ever-present risk that we face, and of the importance of Sir Michael's comprehensive and impressive report. In his 92 recommendations published in June, Sir Michael identified a need to clarify who is responsible for what; to ensure that the public have all the information and guidance they need; to work with essential services to assess risk and protect critical infrastructure; to have a clear recovery plan right from the start of any major emergency; and to establish the right legislative framework to tackle flooding. I can tell the House that the Government's action plan being published today supports changes in response to all his recommendations, but before setting out those changes I want to acknowledge the continuing effects of the flooding, as a second Christmas approaches.
	The fact that most people are now back home, thanks to a great deal of hard work, will be of little comfort to those families who are still out of their homes, or who are living upstairs in them. Our thoughts are with them, and their plight reminds us of the toll that flooding takes not just on people's lives, but on their emotions, and just how difficult it can be to get things going again. That is why, working with local authorities and the insurance industry, we will continue to do all we can to help. My right hon. Friend the Minister for Local Government, to whom I pay tribute for the extraordinary amount of work that he has done to help people affected, announced last month further help for those families.
	We have taken action in the 18 months since the 2007 floods. The Environment Agency has spent £5 million on repairing defences that were damaged. Forty-nine flood defence schemes have been completed, protecting 37,000 homes, from Selby in Yorkshire to St. Ives in Cornwall and from West Bridgford in Nottingham to Worcester and Hexham, the town whose newly built defences successfully protected it from significant flooding in September this year.
	Since summer 2007, more than 78,000 more people have registered with the Environment Agency's telephone flood warning system; the total is now 280,000. All local resilience forums have been briefed on critical national infrastructure in their areas, and we have brought forward to 2009-10 £20 million of flood defence spending. That will mean an earlier start on those schemes, which, when completed, will protect more than 27,000 homes from flooding and coastal erosion. In total, our £2.15 billion investment in flood defence over the three years to 2010-11 will protect an additional 145,000 homes across England.
	The further steps that I am announcing today draw both on the £34.5 million that I set aside to implement Sir Michael's report and on funding from other existing budgets. We are creating a new national flood forecasting centre, bringing together staff from the Environment Agency and the Met Office. That will start operating in April and will improve our ability to respond quickly, by providing better information and more detailed warnings directly to emergency responders.
	Having previously decided that the Environment Agency will take on a strategic overview for all forms of flooding, I am today announcing that local authorities will be responsible for ensuring that arrangements are in place to assess and manage local flood risk from all sources, including surface water. In two-tier council areas, that responsibility will rest with county councils, but we will encourage them to work closely with districts, internal drainage boards and others. I am increasing funding to local authorities by £15 million to allow authorities where the risk is greatest to take on that new role straight away. Part of that will be for the development of surface-water management plans. I can announce that the first six local areas that have successfully bid for the funds are Hull, Gloucestershire, Leeds, Warrington, Richmond upon Thames and West Berkshire.
	In addition, I am establishing a £5 million grant scheme, for which local authorities can bid to help people better protect their homes from the risk of flooding—for example, through fitting flood boards and air-brick covers. That help will be available where it is not possible to provide protection through community-level defences. I am also providing funding to help the Environment Agency improve flood warnings, including moving to an opt-out system for ex-directory numbers. Furthermore, I am putting money into improving our flood rescue capability, so that we can make the best use of the skilled personnel and boats available.
	The national flood framework will help to ensure that all the organisations involved in responding to floods, including those responsible for critical national infrastructure, understand—and are fully prepared for—what they have to do. An outline framework has already been published and the consultation that we are launching will enable us to complete the job. Meanwhile, organisations are already taking action to identify and protect infrastructure.
	On reservoir safety, we are doubling funding for inundation maps for all the country's larger reservoirs and we are providing support for local resilience forums to prepare reservoir emergency plans. We will be publishing a draft floods and water Bill for pre-legislative scrutiny in spring next year to deal with those of Sir Michael's recommendations, including clearer roles and responsibilities and strengthening reservoir safety, that require primary legislation.
	On Monday, I informed the House that we intend to transfer to water and sewerage companies private sewers and lateral drains that connect to the public system. That was welcomed by Sir Michael, and it will release many householders from a liability that they often do not know they have until something goes wrong and they face a hefty bill to sort it out. The transfer will take place from April 2011. Finally, we are establishing a Cabinet Committee to oversee work on flooding. Sir Michael will continue to be involved in reviewing progress.
	The House knows that we can never eliminate the risk of flooding, particularly as climate change takes hold, but we are all determined to learn the lessons from what has happened and to be better prepared in future. All of us—the Government, local authorities, emergency and other services, local communities and individuals—must take flood risk seriously. This report, and the steps that we are taking, will help us to do so and I commend them to the House.

Peter Ainsworth: I thank the Secretary of State for his statement and repeat my thanks to Sir Michael Pitt and his team for the excellent work that they have done. I also commend the work of the Environment, Food and Rural Affairs Committee, chaired by my right hon. Friend the Member for Fylde (Mr. Jack), who has made a useful contribution on these issues.
	The Secretary of State is entirely right to acknowledge the human cost of flooding. I am sure that the whole House will wish to send condolences to the family and friends of those two people who tragically lost their lives over the weekend. Anyone who has met people whose homes and businesses have been destroyed by floods knows only too well that there is often a lasting, less visible, but none the less real, emotional impact on top of the physical disruption that people suffer. Some things, such as personal possessions, simply cannot be replaced by insurance. Can the Secretary of State confirm that hundreds of people are facing a second Christmas out of their homes as a result of the floods of 2007? Why have the Government not published monthly summaries of the number of households displaced, as Pitt recommended? Is it because they are embarrassed about the rate of progress?
	There are, of course, aspects of this statement which we welcome, particularly the establishment of the national flood forecasting centre, which seems an eminently sensible way to proceed. I cannot help but observe, however, that progress in this area is glacially slow. After three years of announcements and statements of good intentions, our country is still acutely vulnerable to flood risk. The number of homes at risk from flooding has increased by 20 per cent. in the space of a few years. Some 43 per cent. of flood defence projects have been delayed, and more than half are not in their target condition. Additionally, 6 per cent. of hospitals, 15 per cent. of ambulance and fire stations and 15 per cent. of power stations are at risk from flooding. When will the natural hazards team, which is responsible for identifying risks to national infrastructure, complete its assessment? Is it not extraordinary in view of the risks involved that that work has not already been done?
	I have to say that the Government's approach to this issue has been lackadaisical. In 2005, the Government knew that there was a problem and promised to put it right. Then they announced that the Environment Agency needed to have the strategic overview of flooding. Today it seems that local authorities will be made responsible. There is still uncertainty about who is in charge. We know the gravity of the risk, and have a wealth of recommendations on how to move forward. Pitt called for strong national leadership if his recommendations were to be implemented. Since when was dithering a feature of strong national leadership?
	Can the Secretary of State confirm that all of Pitt's urgent recommendations have been implemented? Does he agree that his statement is no substitute for legislation? The Pitt report called for a "rapid implementation" of the floods and water Bill. Will he confirm that, as a result of his announcement today, there is no real chance that the floods and water Bill will make it on to the statute books before the next general election?
	There is a sense that the Government are shunting the problem away, beyond the next election, on to local authorities. I note, however, that the Secretary of State has announced additional funding for local authorities, which must be welcome. Can he confirm where that money is coming from? Climate change will only increase the frequency and severity of flooding. As the Stern review pointed out:
	"Adaptation is the only response available for the impacts that will occur over the next several decades before mitigation measures can have an effect."
	My chief concern today is the slow progress that the Government are making in their response to these urgent issues.
	Finally, some 2.3 million homes are at risk of flooding. It is essential that we do not add to that number, so will the Secretary of State join me in calling for a clear presumption against building on floodplains?

Hilary Benn: I echo the words that the hon. Gentleman expressed about the impact on individuals and businesses. When flooding happens, it is devastating. I can tell him that about 1,000 households are either out of their homes or living upstairs, and of those, 118 are living in caravans. The number is coming down by about 100 a week. We make an assessment every two months.
	I fundamentally disagree with the hon. Gentleman's assessment of what has happened in the past 18 months. Protecting 37,000 homes since summer 2007 cannot, under any measure, be described as "glacially slow" progress. As he is pressing for faster progress and given that Her Majesty's Opposition have indicated that from 2010-11 they will not be committed to the Government's spending plans, a lot of people would like to know—he might not be able to say today—what their stance is on flood defence investment, because we are all waiting to hear.
	Next, there is no uncertainty, because the steps that I have announced today and the action that we have already taken are all about people getting on with the task in hand, without waiting for the floods and water Bill, which we will publish in draft form, as I have indicated. Saying, "That's what you've got to do," to the Environment Agency and, "This is what you've got to do to deal with the problem of surface water," to the six local authorities that will start the mapping in the areas that were affected is not about waiting to change the law to require that action; it is about getting on with the job now. Then we will look at the changes that are needed subsequently. The same applies to the mapping of the risk from reservoirs. We are getting on with the job. We are not waiting, but we will change the law as necessary.
	As I indicated to the House when I made my statement in the summer, we have made good progress on implementing the urgent recommendations. Incidentally, the latest figures for people out of their homes are from mid-November, so there will have been further progress and a reduction in the numbers since then.
	The funding that I am making available is from funding that I set aside and which I told the House about in the summer for implementing Pitt's recommendations. As for not adding to the problem, I agree with the hon. Gentleman, which is why the Government have strengthened the planning guidance not once, but twice. PPS25 is absolutely clear about the responsibility on local authorities when they take decisions to grant or not grant planning applications; and, at a practical level, we have already implemented changes to the planning rules on paving and concreting over front gardens.

Parmjit Dhanda: I welcome my right hon. Friend's commitment to ensuring that Gloucestershire is part of the pilot project on surface water. That will be welcomed by residents in Barton and Tredworth in my constituency, which were flooded at the weekend. May I also urge him to continue the work on flooding with my right hon. Friend the Minister for Local Government? We know that removing Whaddon, which lies in the constituency of my hon. Friend the Member for Stroud (Mr. Drew), from the regional spatial strategy, which is likely to be published in the coming days, will make a huge difference to surface water in Gloucester. That surface water has to go somewhere and at the moment it largely goes to that area in Whaddon.

Hilary Benn: I pay tribute to my hon. Friend for the huge amount of work that he did, as did many hon. Members in all parts of the House, in the wake of the flooding. I remember the conversations that we had at the time. The whole purpose of the surface water management plans is to get all the people who have responsibility for the water—where it goes and where it ends up—to see how they can better deal with it when large amounts of rain fall and to ensure that it can be taken elsewhere. That means dealing with a legacy of 200 years of drains and culverts that were not designed for the kind of rainfall that we have seen and for the climate change that is coming—the hon. Member for East Surrey (Mr. Ainsworth) is right about that—and planning who is going to do what as a result, and, at the same time, taking the right decisions on planning and providing places where the water can go when new developments are made. Designing sustainable drainage systems into development is a way of avoiding adding to the problem.
	I wish Gloucestershire all the best in that work. May I commend Gloucestershire on the excellent booklet that has been published for residents? It is full of the most useful guidance and information. It is a model of its kind and I hope that other local authorities will follow it.

Tim Farron: I pay tribute to all those who have worked so hard to prevent flooding, mitigate its effects and provide support to those affected, not just in the summer of 2007, but in the 18 months since, and express solidarity with those who continue to suffer as a consequence of flooding.
	In thanking the Secretary of State for his statement, I welcome the announcement of the action plan and the national flood forecasting centre, and the announcement that the Environment Agency will take on strategic overview responsibilities. Also, the announcement earlier this week that liability for private sewers will be passed to water companies is extremely welcome.
	However, as we receive the statement on learning the lessons from the 2007 floods, many of us are working alongside our constituents who are still picking up the pieces following the floods of autumn 2008. That raises the question why the Secretary of State has taken so long to come to the House to give us a statement on a report that called for immediate action six months ago. Many incidences of flooding could have been avoided, had there been clarity about who was responsible for flood risk management at different levels. How many people have been adversely affected in the six months since the report was published, during which time the Government have failed to act? How many households and businesses have suffered this year because of the Government's failure to implement the recommendations more quickly?
	Furthermore, recommendation 86 in the report proposed the immediate establishment of a Cabinet Committee. We welcome the announcement today that that is going to happen, but will the Secretary of State tell us whether he thinks that waiting six months constitutes immediate action? As Scotland already has its own Flood Risk Management (Scotland) Bill in progress, why is this House being offered only a draft Bill, with subsequent legislation some way off?
	Will the Secretary of State tell the House how many of the 92 recommendations in the Pitt report he has already been able to implement? Will he expand on his plans for the establishment of a national flood forecasting centre? Will he also confirm that many instances of flooding this autumn have occurred because the lines of communication have still not been corrected? Is not that further evidence that the Government's casual approach to the implementation of the report has cost many people dear? Does he accept that even a small improvement in the lines of communication could make a huge difference to those on the front line? Even half an hour's advance warning of a serious flood risk could allow householders and businesses to take vital action to safeguard their property and protect themselves.
	Will the Secretary of State also comment on the backlog in flood relief works in many parts of the country? Can he give assurances to residents and businesses, such as those in the Windermere road area of Grange in my constituency, that the long-awaited flood relief scheme planned for their area will actually come into being in the near future? Does he agree that there is now a strong argument for front-loading investment in flood relief schemes?
	Will the Secretary of State comment on the continuing granting of planning permission for building in high-risk areas, despite Pitt's recommendation for a strong presumption against such development, and will he now support a review of PPS25, to examine whether it is fit for purpose? Will he also take to task the insurance industry, which promised at the time of the floods that no one would go uninsured as a result of the flooding? Now that insurance policies are coming up for renewal, many insurers are refusing to cover flood risk. Will he also take action to ensure that speedy payments are made by insurance companies to householders and businesses?
	Finally, will the Secretary of State comment on the concerns that many of us have about the regionalisation of fire control centres, given that that is highly likely to undermine the responsiveness of local fire crews to developing local situations?

Hilary Benn: I think that this is the first opportunity that I have had to welcome the hon. Gentleman to his new post from the Dispatch Box. I thank him for a little bit of what he said, but I must express sorrow that he did not seem to have listened to what I was saying or, more importantly, to have noticed the action we have been taking since the summer of 2007.
	The hon. Gentleman raised a point about lines of communication in recent instances of flooding. If he, or any other hon. Member, has an example of something that did not go right or that they are worried about, will they draw it to my attention? I am determined that we should learn the lessons and try to get things right.
	On early warning, one thing that has happened is the piloting of the extreme rainfall alert service, which I did not have time to mention earlier because there are quite a lot of things that we have done. When the hon. Gentleman has a chance to read the action plan that I am publishing today, he will see the answer to his question on that point. I should like to give the House an example. On 5 September, the Met Office forecast thunder storms and heavy showers in the south-west, and it put out one of those alerts. We have subsequently heard from Cornwall county council that the alert enabled it to pre-deploy the fire service, which, as a result, was able to rescue someone from their car at a time when the flood waters were rising by 1 ft every 20 minutes. That is a practical example of the measures that we have put in place, helping the emergency services to do a better job of protecting the public in those circumstances.
	The hon. Gentleman mentioned bringing forward flood defence schemes, but he has just heard me say that we have already brought forward £20 million-worth. We are indeed front-loading flood defence.
	On the insurance industry, the hon. Gentleman will be aware that we have worked hard with the Association of British Insurers on agreeing a new statement of principles to ensure that there continues to be insurance cover. That has been very important, although I recognise that, in some cases, premiums and excesses have gone up. However, it is as a result of our efforts that we have that agreement, and the principal factor that made that possible was the significant increase in flood defence expenditure.

John Battle: I thank the Secretary of State for the work that he has done on this matter, for the welcome statement today and, in particular, for the surface water management funds for Leeds, which was hard hit. In the heart of my constituency is the Farnley balancing reservoir, but it cannot cope. Every time there is a deluge, it overwhelms the local Farnley beck, which then floods all the homes around. In assessing the risk, we need to consider not only the mopping up but the underlying causes. I accept that they go back some years, but we will continue to have problems if we do not do that. Will those funds help to address that systemic problem?

Hilary Benn: They are intended to do that. I am aware of the case that my right hon. Friend has raised, and I understand that there is some dispute between Yorkshire Water and Leeds city council over who should take responsibility. However, the fact that Leeds will be one of the six local authorities to produce the first of the surface water management plans will mean that such issues can be resolved and that there can be clarity over who is responsible for doing what.
	I should also like to say to the hon. Member for Westmorland and Lonsdale (Tim Farron) that we will review PPS25 early next year.

Michael Jack: The Secretary of State's statement rightly underscored the crucial role of local authorities in co-ordinating a response to surface water flooding. That was a key finding in the Committee's report and in Sir Michael's inquiry. However, given that the weather events that led to the flooding that gave rise to Sir Michael's inquiry were of an unpredictable nature, how quickly will the remaining local authorities—besides the six mentioned in the statement—be able to take on those responsibilities? If Sir Michael's report is to be fully implemented, all local authorities should be co-ordinating their responses now, not waiting until some point in the future.

Hilary Benn: I want to acknowledge the excellence of the work done by the Environment, Food and Rural Affairs Select Committee in looking at this matter. This is a job for all of us to work on. I have announced the first six authorities today. The plan is to fund another 44 or so to complete that work over the next couple of years. We are going to do that in order, depending on where the risk is greatest. However, I take the right hon. Gentleman's point about the increasing unpredictability of the weather. In agreeing with Sir Michael's recommendations, we are saying clearly today that this is a responsibility for all of us, everywhere. All local authorities need to think about what they would do in such circumstances. During the summer, and subsequently, we saw the benefit of advance planning and of the emergency rescue services. By and large, those arrangements worked pretty well over the summer of 2007, and that was because people had got organised and because the Gold Command system worked.

Eric Martlew: As my right hon. Friend will be aware, in January 2005, there was severe flooding in Carlisle. The flood defences are now being built, however, thanks to the good efforts of my right hon. Friend the Member for Scunthorpe (Mr. Morley), who I see is just leaving the Chamber. Is the Secretary of State sure that the private utilities are prepared and that they have learned the lessons? They had not done so after Carlisle, and there were also problems in the west country with losing water. Furthermore, once the flood defences are built, will my right hon. Friend put pressure on the insurance companies to bring down the premiums in the areas that have been defended?

Hilary Benn: My hon. Friend and his constituents know all about the devastating impact of flooding. He has been able to demonstrate how we have responded, and how we are trying to prevent further flooding in Carlisle. I want to give the House some practical examples in relation to the critical infrastructure. The National Grid has bought 1.2 km of temporary flood defences, which it is storing at a number of locations around the country. In the event of flood warnings being given, it will be able to use those defences to protect its assets. Indeed, defences have already been put around Walham and Castle Mead sub-stations. We have also issued new guidance to Ofwat, requiring water companies to consider vulnerability, and about £1 billion of investment is being proposed by companies in their draft business plans to increase resilience. Plans for protecting all national critical sites will be in place by the end of 2009.
	We will continue our discussions with the insurance companies, because it is important that people are able to avail themselves of the cover.

David Heath: I speak with experience, having been caught in my car in a flash flood on Saturday morning. Happily, my daughter and I escaped unharmed; we were luckier than Mr. Henry Collier, who sadly died in similar circumstances in Martock on Saturday.
	Will the Secretary of State confirm whether the money available to authorities that face regular flooding, such as Somerset, will be given on a needs basis or will it be distributed according to a formula, which will almost certainly disadvantage a county such as Somerset? Secondly, has the right hon. Gentleman been in contact with his colleagues in the Department for Children, Schools and Families about these issues? The Countess Gytha school in Queen Camel in my constituency was flooded again on Saturday and it is a regular occurrence for that school. It seems to me that extra money is needed either to make schools like the Countess Gytha safe for the future or to reposition them somewhere where floods cannot reach.

Hilary Benn: May I also express my condolences to Mr. Collier's family? On money for local authorities, under the current year's revenue support grant, £87 million was already in the system for dealing with flood risk, although I gather that local authorities spent slightly more than that. The £15 million I have announced today will be allocated in order of priority to authorities where we believe the risk is greatest, particularly in respect of surface water management. The hon. Gentleman raises an important point about schools. If he would be kind enough to give me the details of the particular school he mentioned, I will indeed follow it up with my right hon. Friend the Secretary of State for Children, Schools and Families.

James Plaskitt: May I thank my right hon. Friend for his announcement on private sewers, which will be most welcome in my constituency. He will know that parts of my constituency have suffered from chronic flooding problems—particularly the village of Cubbington, which has flooded about half a dozen times in the past few years. We have established a local flood forum to ascertain why it happens and who needs to fix it. It has made some progress, but it has stalled on the issue of who is responsible for remedying surface water problems. In his statement, my right hon. Friend referred to local authorities having responsibility for assessing and managing surface water, but is he clear that local authorities are also responsible for remedying surface water problems?

Hilary Benn: I am sorry to hear about the problems that my hon. Friend's constituents have had to face. In the end, given that there is a two-tier system in some places, we have to make it absolutely clear who has the lead responsibility, which is why we decided that upper-tier authorities should be primarily responsible. Councils need to talk to each other, as they do, and they need to work out how to allocate the responsibility, albeit that the upper-tier authority has the prime responsibility to ensure that allocation. It is about getting together all the people who have responsibility for all the different bits and pieces—including some private owners, as people do not always know who owns a culvert that might cause a problem if it is blocked and there is a lot of rain—and sorting the problems out. We want to make it clear that local authorities have a lead responsibility for sorting them out; that is what people want.

Angela Browning: The Secretary of State will be aware that on 30 October the small town of Ottery St. Mary and many surrounding villages in my constituency were flooded at 2 in the morning, with 4 in of rain coming down in an hour and 3 ft of hail, which was still sitting there two days later. My own home and those of my neighbours were flooded for the second time in 11 years; we all hope to be back in by Easter. It is the most appalling experience to go through.
	May I ask the Secretary of State about flooding in rural areas? Experience has shown that it is often minor watercourses, not necessarily the main river that flows through towns, that behave in ways that no one expected and often cause the damage, turning lanes and roads into rivers. As well as looking into the run-off from buildings, has the right hon. Gentleman had a chance to study run-off from land and consider farming practices, for example? The relevant boxes that need to be ticked are often left unticked in rural areas because only small clusters of properties are affected, so has he thought of anything further that can be done to mitigate flooding problems in rural areas?

Hilary Benn: The hon. Lady raises an important point, and I am sorry to hear about what she and her constituents have experienced. I discussed this particular event with the head of the Met Office, as even with the extreme rainfall alert system in place, this event was so specific and localised that, as the hon. Lady will know, it was not picked up by it. We could perhaps use the hon. Lady's particular example as a test case, and if she comes to see me with further details, we can look to see whether the present structure will be able to pick up that sort of problem. I am conscious that when everybody thought about surface water flooding in the summer of 2007, they thought of Hull because so many people were affected. The hon. Lady, however, is absolutely right that it happens on a much more localised basis in many parts of the country. That provides another argument for getting all those with responsibilities, including landowners, together to see what they can do to reduce the risks in those circumstances.

Martin Salter: May I say that my constituents will think it a bit rich to hear Conservative spokesmen complaining about building on the floodplains when it was the Conservative county council that tried to build over Kennet meadows in south-west Reading? I applaud the Secretary of State's decision to sort out the archaic system of private drains and sewers, which causes so many problems for residents of the Haddock estate in my constituency. I also welcome the additional funding for the West Berkshire council, which desperately needs help to sort out the management of surface water because that was what caused the vast majority of the flooding in my area in 2007.

Hilary Benn: I am grateful to my hon. Friend for his kind words. What we have done on the sewer transfer is effectively to create a sort of national insurance scheme. Individual householders, as Members will be aware from specific cases, can often suddenly realise, "Heavens, I did not realise that I was responsible for that". It is a sensible step to have taken. We looked at West Berkshire's proposals and decided that we would fund them. Local authorities have the responsibility to deal with surface water flooding, including from minor watercourses.

David Heathcoat-Amory: If the heavy rain of July last year had fallen slightly further south, the Somerset levels, which are prone to flooding in any case, would have been catastrophically affected. There was severe local flooding last week. Is the Secretary of State aware that a contributory cause of this vulnerability is the failure of the Environment Agency properly to maintain the rivers for which it is responsible in Somerset? Will he have a word with the Environment Agency to make sure that it carries out proper and regular dredging and removes potential obstructions? Will he ensure that the agency's discharge of its environmental responsibilities is not at the expense of its drainage responsibilities?

Hilary Benn: I am grateful to the right hon. Gentleman for raising this case, which I know engenders a great deal of debate in many parts of the country. The Environment Agency is acutely aware of its responsibilities for dealing with flooding. Sometimes, however, clearing out a channel and making it even wider may speed up the rate at which the water ends up in another place, so the operation is not always as straightforward as it might appear in the first instance. If the right hon. Gentleman would be kind enough to drop me a line with further details, I would be happy to take up his particular case and pursue it with the Environment Agency.

Paddy Tipping: It has been a long campaign to get private sewers adopted, and I am delighted that the Secretary of State has taken that decision. The real work now is to ensure that things happen on the ground after 2011. Secretaries of State can be assured that Nottinghamshire county council will work with district councils in the county to tackle surface water draining problems—but they will need resources to sort out problems in villages such as Woodborough, Lowdham and Lambley.

Hilary Benn: I am very glad to hear from my hon. Friend that this work will be done and that the council will pursue it with great vigour. I wish him and all others working on the project every success.

Martin Horwood: I appreciate much of the Secretary of State's statement, particularly where it relates to householder liabilities for private drainage and the review of planning policy statement 25, which is very welcome. I hope that the right hon. Gentleman tells the planning inspectorate that that document is now up for review. I appreciate the funding that has followed the right hon. Gentleman's interest in Cheltenham and the work on flood alleviation schemes in my constituency. However, at a time when it is difficult enough for people to sell their homes and sustain their businesses, will the Government make an absolute commitment to prevent insurance companies from offering cover but then excluding flood risk—even when people have paid for flood resilience work on their properties—or imposing wholly unreasonably premiums, sometimes running to tens of thousands of pounds? In my book, that is not really insurance.

Hilary Benn: If that is what is going on, we will take it up with the insurance companies.
	The hon. Gentleman mentioned people having flood resilience work done on their homes. It seems to me very sensible to have such work done when a home has been flooded, as part of the restoration. It may cost the insurance company a little more, but fitting flood boards, air brick covers and so forth will reduce the likelihood of a further claim. It is important for us to take action to help ourselves to protect our properties, and I can understand why householders with insurance policies would be more than a little miffed if, having taken such action, they could not obtain cover.

David Drew: I thank my right hon. Friend for what he had to say, and particularly for the financial help that we shall be getting in Gloucestershire. As my hon. Friend the Member for Gloucester (Mr. Dhanda) said, we thought that we were going there again last Saturday, because there was quite serious flooding. With that in mind, will my right hon. Friend consider innovative solutions which, in many instances, will involve community self-help? The problem in my constituency is what I would call diffused flooding: the areas that are hit are randomly distributed, but they are hit very regularly. Dealing with it will involve money, but it will also involve considering how communities can come together to do a number of things to help themselves. I hope that that is one of the measures that my right hon. Friend will encourage.

Hilary Benn: I am happy to encourage all efforts to deal with the problem that anyone is prepared to make. The fact that my hon. Friend has described community self-help as part of the solution is very much in keeping with what Sir Michael Pitt said in his report. One of his most striking observations was that, although Government, local authorities, the Environment Agency and others should act, ultimately this was also a matter for individual responsibility, because we can all be affected and we do not know when flooding may come. I applaud the approach that my hon. Friend has advocated, and I hope to see more of it around the country.

Mark Harper: I am grateful for the Secretary of State's kind words about the excellent work that Gloucestershire county council has been doing in informing residents about how they can protect themselves. I shall ensure that it is fed back to the leader of the council.
	The right hon. Gentleman mentioned surface water management plans. Obviously it is good that local authorities have that responsibility, but, given the number of different bodies involved—not just local authorities but water companies and private owners—one of the problems is getting them all to accept the responsibility. Can the Secretary of State confirm that until the floods and water Bill has become legislation, local authorities can draw up plans, but do not have power to enforce behaviour by those other bodies? Having such power would make the process of drawing up plans much more effective.

Hilary Benn: I agree, but we are not waiting for the powers that are needed to get on with trying to deal with the problem. Even in the absence of a formal power to require, it is possible to get members of the local community together in a room and say "A particular problem is this culvert here, and that is the person responsible." As Members will know only too well, there are many ways of encouraging change in the absence of legislation, and I am sure that Members will employ them in order to look after their constituents.

Fabian Hamilton: I, too, warmly welcome my right hon. Friend's statement and, in particular, the money for Leeds, which is one of the trial areas for the surface water management.
	As my right hon. Friend will know, residents of the Wellhouses in my constituency are regularly flooded because of the overflow of Gledhow beck, which, further downstream, will affect his constituents as well. Can he confirm that, after 2011, Gledhow beck will be one of the areas transferred to public responsibility, and Leeds city council will be able to take over responsibility for it? Residents often have no idea when they move to the area that they are responsible for maintaining its banks.
	Will my right hon. Friend also put pressure on Leeds city council to do something about the balancing lake at Roundhay park, which is often the cause of the huge amount of flooding in the Wellhouses?

Hilary Benn: I shall need to check whether Gledhow will be covered by the transfer arrangements. I think it will depend on the definitions, but I will pursue the point. As for my hon. Friend's second question, that is exactly what the council's surface water management plans are intended to identify.
	I pay tribute to the work of the staff of Leeds city council. I think it fair to say that the council has a pretty good national reputation for its work on flooding. Following the efforts to protect the people who have been affected by the flooding of Wyke beck three or four times over the past four years, they have certainly noticed a difference. For instance, one of the pilot schemes involved the introduction of flood guards and other flood protection, which has helped to prevent their houses from being damaged in future.

Alan Beith: May I remind the Secretary of State that a great many people in Northumberland are still out of their houses following this year's floods, and many more feel that their houses are vulnerable and will remain so unless the Environment Agency agrees to changes in river management? Will he use his good offices to ensure that his own Department deals with the serious damage to the harbour at Amble, and also to persuade the Minister of State, Department for Environment, Food and Rural Affairs, the right hon. Member for Liverpool, Wavertree (Jane Kennedy) to deal with the issue of funding for the district, county and unitary authorities?

Hilary Benn: I believe that the new chair of the Environment Agency will visit the region tomorrow to see how matters have been progressing, and I shall be happy to take up the issues raised by the right hon. Gentleman with the agency.

Colin Burgon: I welcome the money provided for Leeds city council to draw up a surface water management plan. Will the Secretary of State use his considerable influence in our city to ensure that the Liberal-Conservative-controlled council speaks to people like me so that we can raise the issues affecting people living beside Kippax and Collingham becks, people in Methley living by the River Aire, and people in West Garforth? Will he assure me that he will use that power to ensure that they speak to me, and to other councillors?

Hilary Benn: It is very kind of my hon. Friend to say that I have the power to make that happen, but I hope that all local authorities—including Leeds city council—always talk to all Members of Parliament in their areas.

Paul Holmes: The floods in the summer of 2007 affected four rivers in Chesterfield: the Rother, the Hipper, the Whitting and the Holmebrook. The Environment Agency moved quickly to draw up plans to prevent the worst two offenders, the Rother and the Hipper, from flooding again by introducing upriver catchment areas, but the Environment Agency has warned my constituents in the affected areas that it will be at least five to 10 years before Government money will be available to enable them to be built. Can the Secretary of State offer any hope of more urgent action, or is the Government's response to residents of areas such as Alma street in my constituency, and many others, that they should simply cross their fingers and hope that it does not rain for another 10 years, because otherwise they will be flooded again?

Hilary Benn: I have great sympathy with the hon. Gentleman's constituents who have suffered in the way that he has described. The Government's job is to ensure that we play our part by providing more funding for the Environment Agency for flood defence work, and that is exactly what we are doing. I think I had been in the job for about a week when I stood at this Dispatch Box and announced an increase of £200 million over the three years to 2010-11. It is because we have been putting in more money that we have been able to protect an additional 37,000 homes since the summer of 2007, and 145,000 homes will be protected by the end of 2010-11. We all have a responsibility to ensure that we argue the case for further investment in flood defence, because that is the only way in which we shall be able to help the hon. Gentleman's constituents.

John Grogan: Following the comments of my hon. Friend the Member for Stroud (Mr. Drew), may I refer particularly to recommendation 45 of the report? It states:
	"The Government should be encouraging more local communities to promote innovative schemes, including contributing towards the costs".
	That has been done in the village of Elvington in my constituency, and there is a prospect of its being done in the village of Saxton. Should it perhaps be more of a priority for the Environment Agency, where possible, to provide technical advice and support for such schemes, as it is beginning to do in Yorkshire and the Humber?

Hilary Benn: That is a very sensible suggestion. I think it inevitable that communities and others will increasingly wish to participate in the carrying out of works, and in some cases contribute to the cost, on top of what is provided by Government expenditure.
	My hon. Friend will be well aware of the benefits of big flood service schemes. Only yesterday, I saw a photograph of him sitting atop the defences at Selby that have been protecting his constituents.

Roger Williams: When homes and businesses are flooded, very often the first help comes from the fire and rescue services—I speak from experience as the cellar of my constituency office was flooded last summer—but I am told that the funding formula for the fire and rescue services does not include any flood work or the resources to do that work. The Secretary of State said in his statement that he was also putting money into improving our flood rescue capability. Does that mean that the fire and rescue services will now get real support for the work that they do, which is so valued during times of flooding?

Hilary Benn: I agree with the hon. Gentleman about the skill, expertise and, in some cases, bravery of our fire and rescue services in helping people when flooding strikes, and I am sure all Members would wish to applaud them for that. The fact is that a considerable number of fire and rescue services have built up their capability; they have bought boats and undertaken training, for example. The additional money I am now providing is to help ensure we make the best use of the assets, because there are quite a lot of boats around from various sources and we must ensure both that they are in the right place when they are needed and that there is the personnel with the training to use them. That is what we should focus our efforts on. Most people not unreasonably think that if they are in danger because of rising water and they ring 999, they can expect the fire and rescue service to come and help. That is what the fire and rescue service does—its overriding responsibility is to help people in trouble.

Helen Southworth: First, may I welcome my right hon. Friend's statement? It will give a lot of hope to those of my constituents who have had some very nasty experiences with flooding over the past few years. We have been working extremely hard to try to tackle the flooding that has taken place in my constituency, particularly in Great Sankey and Penketh, which has caused horrible experiences, sometimes for vulnerable people. That flooding has been caused by two things: in some cases, ineffective management of current water systems; and also the extensive building growth in Warrington over the past 20 years. Will my right hon. Friend make sure that there is effective information sharing and communication between the local authority, the Environment Agency and the utilities companies so that they can both manage current situations and plan for the continued housing growth that is due to take place in Warrington, as a designated housing growth area, over the next few years?

Hilary Benn: The single most important step we have taken to deal with the problem that my hon. Friend identifies is PPS25, because it clearly lays the responsibility with local authorities to take full account of flood risk in taking decisions. It gives the Environment Agency a statutory responsibility to be consulted—the agency is, after all, the expert. The experiences of my hon. Friend's constituents, and of the many other constituents who have been talked about today by other Members, reinforce the importance of people getting themselves on to the flood warning system and of the practical change we are making to get more telephone numbers on the system, because if people get the phone call, the text or the e-mail—whichever they have asked for—they might be able to take upstairs the kinds of valuable possessions that have been mentioned, and they will not suffer quite as much as when they have been completely unprepared. We have a responsibility to get on that system; the number is 08459881188. If anyone is not on it, they should get on it, so they can get a warning if flooding threatens.

Lembit �pik: The source of the River Severn is in my constituency and settlements such as Llandrinio, Crew Green, Meifod, Bettws, Tregynon and Caersws have always lived with flooding. However, these communities are concerned that they could be deliberately flooded more often in order to protect larger conurbations downstream. Can the Secretary of State confirm that rural communities will not be sacrificed for the sake of towns and cities, and that we will instead find creative solutions that work for town and country alike?

Hilary Benn: We certainly do need to find ways of dealing with the problem in order to protect as many people as possible, but, as Members are only too well aware, in the end water is going to find somewhere to go. That is why understanding the likely path of that water and looking at the options for dealing with it is part of the process that we have now started and the responsibility that local authorities and others will take on.

Jeff Ennis: I warmly welcome my right hon. Friend's statement. I am sure he will recall that last year in both Barnsley and Doncaster in my constituency 5,000 homes were affected as a direct consequence of the bursting of the banks of the Rivers Dove, Dearne and Don. I certainly welcome the greater role local authorities will now play in flood alleviation, in the hope that they will be able to provide a more rapid response. However, will my right hon. Friend also look at trying to tap into the willing support from parish and town councils for their bigger metropolitan district councils in terms of methods of flood alleviation, even if it is only to provide more flood warnings?

Hilary Benn: I certainly would encourage the parish and town councils to get involved. The truth is that this is a job for everyone; and the sooner everyone gets on with it, the better we will be able to deal with it.

Evan Harris: My constituents in Kidlington, west Oxford, South Hinksey, north Abingdon and south Abingdon have been flooded by five or six tributaries of the Thames, and the Secretary of State was kind enough to visit some of those communities last year. Some of them have been flooded four times in the past nine years, and they are terrified each time that it rains that it might happen again. Therefore, can the right hon. Gentleman explain why the timetable for the adoption of private sewers appears to have slipped to 2011, and might it be possible to front-load some of the funding in the spending plan, which would enable extra schemes that cannot otherwise pass the threshold to be started now and also give a boost, as part of the fiscal stimulus, to the construction industry, which could usefully do some of the work next year, rather than in two years' time when some engineering firms may be out of business?

Hilary Benn: I do not think that the transfer of the private sewers will help the hon. Gentleman's constituents; it depends on the source of the flooding, and it will take time to deal with that. Some of the houses I visited when I came to his constituency would certainly benefit from some of the flood resilience workswe saw some homemade versions as we walked around on that occasion. We have, indeed, brought forward expenditure. The 20 million identified in the pre-Budget report is in addition to the increase in expenditure we had already put in place, and it will allow more schemes to start earlier so that protection is provided faster than would otherwise be the case.

Daniel Kawczynski: rose

Mr. Speaker: Order. The hon. Gentleman must be present to hear the statement before he questions it.

Points of Order

Michael Howard: On a point of order, Mr. Speaker. You responded yesterday to the letter written to you last week, signed by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), the right hon. and learned Member for North-East Fife (Sir Menzies Campbell), the right hon. Member for Birkenhead (Mr. Field) and me. In that letter, we asked you to give precedence to our complaint of breach of privilege in respect of the arrest of my hon. Friend the Member for Ashford (Damian Green). You have declined that request, which means the House does not have the opportunity to consider whether the matter should be referred to the Standards and Privileges Committee. I wonder, Mr. Speaker, whether you will be prepared to give the House this afternoon your reasons for declining that request?

Mr. Speaker: No. The right hon. and learned Gentleman knows well that I do not give my reasons. I have declined the invitation from him and his parliamentary colleagues, but I do not give reasons.

William Cash: Further to that point of order, Mr. Speaker. Am I right in saying that nothing you said in your statement earlier today implies that the entry and search in the precincts of the House by the Metropolitan police was lawful, as asserted by them, or that the Police and Criminal Evidence Act 1984 overrides article 9 of the Bill of Rights, which protects our constituents' confidential information, the national interest and freedom of speech in this House? To help to get to the bottom of all this and to protect those rights, I ask you, Mr. Speaker, to insist on the production of the Johnston report and that it be placed in the Library of the House. In order to avoid confusion on the question of criminal proceedings, will you be kind enough to do that?

Mr. Speaker: The hon. Gentleman knows that last night I explained to him that I only got word of this matter when I came downstairs. I promised to come back to him and to the hon. Member for South Norfolk (Mr. Bacon). That I have done, through a statement that I made less than an hour ago. I have made my position clear, and I cannot expand on that.

Simon Hughes: Further to that point of order, Mr. Speaker. This is a separate point, but it is linked to both of your statements, which I heard and for which I am grateful, and to the points of order raised by the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) and the hon. Member for Stone (Mr. Cash). You have made the position clear about the Committee and about giving your permission for a motion on standards and privileges, but there is the remaining ring-fenced issue of the report to consider. I understand that the report, which the Met police commissioned from another police force, the British Transport police, has either been completed or is in draft and is about to be completed. Irrespective of procedures that have been decided on by two of our Select Committees or that may happen later in this House, may we ask you whether you would be willing at least to request before we break for the Christmas recess that the British Transport police chief constable or the acting commissioner of the Met police furnish us with that report, so that all those in this House who have jobs to do to inquire into what happened when the office of the hon. Member for Ashford (Damian Green) was invaded by the police can have the facts, as discovered and assessed by the chief constable of the British Transport police?

Mr. Speaker: This is not a matter before the House; this is a report that has gone from one chief constable to another. There is nothing to prevent the hon. Gentleman from requesting

Simon Hughes: I am going to.

Mr. Speaker: Sorry, I did not pick that up. Did the hon. Gentleman say that he has requested the report?

Simon Hughes: I said that I intend to do that, but I was hoping that the authority of the Chair could assist.

Mr. Speaker: The hon. Gentleman does well on his own, without seeking assistance from me. I have set out what he should do. If he or any other hon. Member wants that report, they should ask the chief constable to produce it.

Kenneth Clarke: Further to that point of order, Mr. Speaker. Your ruling in respect of the Standards and Privileges Committee is, of course, entirely in accordance with the practice of the House; you have declined the request and, under your practices, you do not give your reasons. But I am sure you appreciate that it leaves us in an unusual situation, because there is a complaint, essentially, of a breach of privilege relating to the police entering these premises and the office of my hon. Friend the Member for Ashford (Damian Green). The Government have tried to set up one Committee of the House, which they have not, so far, been able to establish, and several Select Committees are inquiring into the matter, but the Standards and Privileges Committee is not empowered to discuss a rather serious matter of privilege. I wonder whether you would perhaps consider whether we should examine our practices and think of some other route by which the obvious Committee to consider this might, of its own volition, decide to conduct an investigation. It seems to me that the House is looking into this matter by every conceivable route apart from the obvious one, for which the Standards and Privileges Committee exists.

Mr. Speaker: There is nothing to stop the right hon. and learned Gentleman raising that matter with the Procedure Committee, because it is the one that would look at the points he raises. Let us cast our minds back to the situation on 3 December. I made a statement and the House then made a decision on the Monday following. I stated that I wanted a Committee to investigate the matter and to look into all the circumstances, but then the House came along and made a decision. I know the arguments about the fact that there was a small majority, but there have been smaller majorities in this House. But I serve the House and the House has made a decisionI am bound by that decision, as long as the criminal proceedings go on.

Business without Debate

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Social Security

That the draft Christmas Bonus (Specified Sum) Order 2008, which was laid before this House on 26 November, in the previous Session of Parliament, be approved. (Chris Mole.)
	 Question agreed to.
	 Motion made, and Question put forthwith (Standing Order No. 118(6)),
	That the draft Child Benefit (Rates) (Amendment) Regulations 2008, which were laid before this House on 25 November, in the previous Session of Parliament, be approved. (Chris Mole.)
	 Question agreed to.
	 Motion made, and Question put forthwith (Standing Order No. 118(6)),

Tribunals and Inquiries

That the draft Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009, which was laid before this House on 26 November, in the previous Session of Parliament, be approved. (Chris Mole.)
	 Question agreed to.

CONSOLIDATED FUND BILL

Motion made, and Question put forthwith (Standing Order No. 56), That the Bill be now read a Second time.
	 Question agreed to.
	 Bill accordingly read a Second time.
	 Question put forthwith (Standing Order No. 56), That the Bill be now read the Third time.
	 Question agreed to.
	 Bill accordingly read the Third time and passed.

Banking Bill (Programme) (No. 3)

Ordered,
	That the following provisions shall apply to the Banking Bill for the purpose of supplementing the Orders of 14 October 2008 and 26 November 2008 (Banking Bill (Programme) and Banking Bill (Programme) (No. 2)):
	Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion one hour after the commencement of proceedings on the Motion for this Order. (Chris Mole.)

Banking Bill

Third Reading

Ian Pearson: I beg to move, That the Bill be now read the Third time.
	We had an interesting debate on Report last month, and I am grateful to everyone who took part in it and to the Members of all parties who have contributed to the debate as the Bill has passed through this House. We very much appreciate the continuing cross-party support for this crucial legislation, and I am grateful for the help and co-operation from all parts of the House in achieving the challenging timetable imposed on this Bill by the sunsetting of the Banking (Special Provisions) Act 2008 in February of next year. In particular, I thank those Members who served on the Public Bill Committee, and I am grateful for the good spirit and constructive approach that all sides took to those sittings. The Government have listened to a number of the arguments made, and I believe the Bill has been improved as a result.
	These are challenging times for financial markets and economies across the world, and I believe that the Bill is a timely package of reforms to improve the UK's framework for ensuring financial stability and protecting depositors. The Government have taken decisive action to protect the UK's financial stability during this turbulent period, including measures to recapitalise and strengthen the UK's banking sector and provide support to institutions facing difficulties, but the need for a permanent strengthening of the legislative framework in this area has been clear.
	As we have debated at length during the past few months, this legislation will provide the authorities with the tools they need to resolve effectively failing banks while protecting financial stability, depositors and taxpayers, and minimising the disruption to the wider economy. Other measures in the Bill will enable the Financial Services Compensation Scheme to make faster and more efficient compensation payments and will strengthen the Bank of England's role in financial stability, with a new objective for financial stability and enhanced tools for pursuing it.

Mark Harper: The Minister refers to the bank rescue package. When the Chancellor came before the House, he said that the implications on the public finances of that package were mostly temporary. Could the Minister set out for us which of those arrangements will have a non-temporarya more permanentimpact on the public finances, so that the House is clear on that?

Ian Pearson: I agree entirely with what the Chancellor said to the House. The hon. Gentleman will be aware of the statement that the Chancellor made and the information that is available in government, which, if he looks at it, he will find provides him with the answers he seeks to the question he raises.
	At this point, I should briefly mention the two additions to the Bill that my right hon. Friend the Chancellor signalled in his recent pre-Budget report. They will increase the legislation's effectiveness in allowing the authorities to deal with risks to financial stability and to safeguard London's competitiveness as a global financial centre. First, they will extend the Treasury's powers under the special resolution regime to allow it to take bank holding companies into temporary public ownership in cases where the resolution of only the deposit taker or deposit takers within a banking group would not, by itself, be sufficient to prevent a serious risk to financial stability, public funds, or both.
	The second addition is a response to the experience of the administration of the UK subsidiary of the failed US investment bank, Lehman BrothersLehman Brothers International (Europe). The Government propose to take a power in the Banking Bill to introduce, by secondary legislation and after a formal review, a new special insolvency procedure for investment firms that hold client assets or client money. The expert liaison group, which I set up earlier this year, will help the Government in this area. Lord Myners, the Financial Services Secretary, intends to table these amendments for discussion in Committee in the other place.
	On 26 November, the Government Chief Whip in the other place set out how we intended to proceed with the Banking Bill in the current Session, with the support and agreement of the usual channels. The No. 2 Bill that was introduced in the other place yesterday is identical in every respect to the Banking Bill that we are considering today, and the procedure allows the other place an additional fortnight to consider the Bill, which I am sure hon. Members will agree is entirely to the benefit of all concerned.
	As the House will be aware, the Banking Bill was carried over to the current Session and, if hon. Members consent today, it will complete its passage in this House and go to the other place tomorrow. At that point, the No. 2 Bill will be dropped and all further consideration in the other place will be on the Bill sent from this House today.

Julie Kirkbride: Although the aims of the Bill are laudable, I wonder whether the Minister is sure that it will do enough. He may not have had the chance to listen to Sir Victor Blank on the radio this lunchtime talking about the Government bail-out. He said that the recapitalisation scheme was highly necessaryand we all support itbut he also pointed out the problem that the banks now have with regard to lending because of the Government's new capital requirements. Does the Minister agree that those requirements are preventing the banks from lending the money that businesses need?

Ian Pearson: I was in meetings so I was not able to hear what Victor Blank said. He is obviously a serious figure in the business community and we will want to take due account of his views. We meet him on a regular basis, and Ministers and officials are well aware of his and his company's position on these issues. From what the hon. Lady says, his comments would not appear to refer directly to legislation appropriate under the long title of the Bill, but she raises an important point.
	The whole House has appreciated the action taken by the Government to recapitalise the banks to avoid the potential systemic risk to the financial services in this country. We need to continue to do all that we sensibly can in these difficult times, and that is one of the reasons why we have been considering whether further action is needed. I indicated the two areas in the pre-Budget report that suggested how the Bill could be strengthened in the other place, and I think that we have broad support from both sides of the House for those sensible measures. However, they will of course need to be thoroughly scrutinised in this House and in the other place.
	I am aware that there are some areas where Opposition Members may still have some concerns, but we went some way towards resolving those in Committee and in amendments on Report. I would like to take this opportunity to provide an update on progress in some of those areas.
	As hon. Members will be aware, clause 75the power to change lawattracted significant interest in Committee and on Report. It will provide the Treasury with a power to amend legislation to enable the powers of the special resolution regime to be used more effectively. As we discussed in Committee, this is not a general power to amend legislation; it is targeted and limited. It may only be used in order to facilitate a resolution and, in using it, the Treasury must have regard to the special resolution objectives set out in clause 4.
	In Committee, I agreed that I would ask the expert liaison group to consider whether the amendments brought forward on Reportparticularly the explicit exclusion from the scope of the power of the provisions of the Bill and underlying secondary legislationwould help to reduce the possible impact of the existence of this power on legal certainty in relation to financial contracts. The hon. Members for Fareham (Mr. Hoban) and for South-East Cornwall (Mr. Breed) and I are at one in recognising the importance of legal certainty in relation to contracts. I am pleased to report that when the expert liaison group met earlier this week, it agreed that this amendment would indeed do this. We are continuing to engage with the group on this issue, and of course the power will also be scrutinised carefully in the other place, not least by the Committee on Delegated Powers and Regulatory Reform.

Andrew Pelling: I appreciate the need for flexibility in these difficult financial times. Will that clause or any other give the Government the power to set up a bank in an emergency that can take over bad debts from other banks to provide a possible solution to a financial crisis?

Ian Pearson: I know that the hon. Gentleman has raised that issue before on several occasions. Clause 75 would not do what he suggests. As I say, the clause provides a targeted and limited use of power to change law to make the special resolution regime work as effectively as possible. He will be aware, from the special resolution regime detailed in part 1 of the Bill, of the exact procedures necessarywho pulls the trigger, who operates the special resolution regime, and how the parties work together. We believe strongly that the range of measures that we have in place are a substantial improvement on the Banking (Special Provisions) Act 2008, and that is one of the reasons why we want to ensure that they reach the statute book in a timely manner, given the fact that the Act is sunsetted in February.

David Taylor: The Minister may remember new clause 2, which I tabled on Report, with the support of my hon. Friends the Members for Stroud (Mr. Drew) and for West Bromwich, West (Mr. Bailey). It addressed the remutualisation of failed former building societies. Every building society that was privatised in the 1980s and 1990s has failed in the past few months of this crisis. When I was asked by the Minister not to press the new clause to a Division, he said that the existing legislation would provide sufficient powers for financial institutions that emerge from the present crisis to become mutually oriented if that was desired at the time. Will he meet us to discuss that point, because mutualism provides a robustness and responsiveness that other financial structures do not, as we have seen in the past nine months?

Ian Pearson: It certainly remains my understanding that the legislation is sufficient to take into account those issues, but I would be more than happy to meet my hon. Friends to discuss that in more detail.
	I now turn to the issue of partial transfers and the safeguards that the Government will put in place to protect creditors, and particularly to reduce disruption to set-off and netting agreements and security interests. I know this issue was of great interest to members of the Committee, and rightly so. Again, I can report that, when the expert liaison group met earlier this week with officials from the Treasury, the Bank and the Financial Services Authority, they continued to make good progress towards providing for safeguards that will maintain the right balance between ensuring that the authorities have the necessary flexibility to ensure an effective resolution, while protecting creditors' and counterparties' interests.
	We are continuing to work closely with the group on refining the safeguards and, of course, we are conducting a wider public consultation. We aim to be in a position to report back, including on the results of the consultation, early in the new year. I repeat the commitment that I have made on previous occasionsI see the process of producing the secondary legislation as being one of co-production. We want to work in detail with the industry to ensure that we get the secondary legislation absolutely right and that there are sufficient safeguards to protect creditors' and counterparties' interests. We understand the importance of that for the industry.
	The Bill represents the Government's considered response to some of the key lessons learned during this period of financial instability. It provides a permanent addition to the country's system for financial stability and depositor protection, and these arrangements will provide the UK authorities with a refined and proportionate set of tools to deal with difficulties in the banking sector that can affect depositors and the wider economy. It is vital to get the proposals right and to ensure that the UK's framework is sufficiently robust to deal with future as well as current challenges. So I am grateful for the thoughtful and constructive scrutiny that the House has given to the Bill, especially in the Public Bill Committee but also on Second Reading and on Report. I am sure that that constructive spirit will continue during this debate.
	The Bill is a vital piece of legislation that will enhance the ability of the authorities to secure the financial stability of the UK both now and in the future, and I commend it to the House.

Mark Hoban: I am grateful to the Minister for his explanation of the Banking (No.2) Bill procedure, as it seemed rather odd to be giving this Bill a Third Reading when a Bill that was identical to it except for the title was given a Second Reading in the other place yesterday. That was a sign of the way in which we have sought to co-operate with the Government to ensure that the Bill reaches the statute book before the Banking (Special Provisions) Act 2008 expires in February next year. As the Minister said, we have sought to engage constructively as the Bill has passed through the House. We have not always agreed on some of its provisions, but we have sought to ensure a full discussion and full scrutiny.
	I am grateful to my hon. Friends the Members for South-West Hertfordshire (Mr. Gauke), for Braintree (Mr. Newmark), for Gosport (Sir Peter Viggers) and for Wellingborough (Mr. Bone) for their contributions in Committee. My hon. Friend the Member for Gosport was one of four members of the Select Committee on Treasury who served on the Public Bill Committee, along with the hon. Member for South-East Cornwall (Mr. Breed). The deliberations of the Treasury Committee in the aftermath of Northern Rock and financial instability contributed a great deal to our consideration of the Bill in the Public Bill Committee.
	We supported the Bill on Second Reading and we do not intend to oppose it on Third Reading. That does not mean that it is perfect, and, as the Minister said, there are and have been some significant concerns about it. Those concerns were particularly evident when it was first published. We welcome the fact that the Government listened not just to the concerns that we expressed in Committee but to the wider concerns of the financial services sector. We teased out some of the sector's concerns in Committee, particularly when its representatives gave evidence to the Committee. The Minister has sought to respond to those concerns. We welcome the amendments to the Henry VIII powers in clause 75, as well as the establishment on a statutory footing of the banking liaison panel in clause 10. The Minister referred to the work of the panel.
	We also welcome the fact that the Minister sought to consult widely on the secondary legislation and the code of practice. The Bill gives the tripartite authoritiesthe Treasury, the Bank of England and the FSAquite extensive powers. Safeguards over the use of the powers are included in the secondary legislation that flows from the Bill and in the code of practice. Only when the legislation is seen as that package will outside bodies take comfort from the shape it is in.
	It is worth remembering that the Bill has a very narrow focus. In the context of the current financial crisis, it deals principally with measures to tackle the problems associated with a failing bank. Its provisions do not address the re-opening of credit facilities to bank customers. Although it gives the Bank of England new statutory responsibilities for financial stability and gives it oversight of the payments system, it does not address issues such as the macro-prudential regulation of the banking system, a topic that has provoked considerable debate both in Parliament and outside.
	Even on the issue of which banks are included, the Bill is narrowly focused. Clause 2 describes a bank as
	a UK institution which has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on the regulated activity of accepting deposits.
	That means that bodies such as Icesave are excluded. Icesave was a branch of an Icelandic bank, and branches are excluded from the Bill. None of the provisions in the Bill would have helped the depositors of Icesave who, in some respects, are still waiting for compensation following the collapse of the Icelandic banking system.
	A point that we raised in Committee, which the Minister sought to address, was that the Bill covers only deposit takers and does not take into account institutions that are fundamental to the stability of the banking system and do not accept deposits. We therefore welcome the amendments that the Government propose to table in the other place to deal with institutions that accept client assets and trade. In Committee, we discussed Lehman Brothers, where there have been significant problems with the administration arrangements because the tools are not in place to do the job. We welcome the move to amend the Bill, but I am sure that my noble Friends in the Lords will look very carefully at the amendments that the Government propose to table.
	At the heart of the Bill are the increased powers being given to the tripartite authorities to intervene when a bank is failing and powers through the special resolution regime to enable them to resolve the problems of a failing bank. Part 1 sets out the special resolution regime and establishes the framework for putting a bank in the special resolution regime and the powers that can be used by the Bank of England or, where appropriate, the Treasury to deal with a failing bank. We talked extensively in Committee about the objectives of the special resolution regime. I do not particularly want to dwell on those subjects at this point, although I want to come back to the issue of financial stability later on.
	Although the Bill does not rank the objectives given, it has been clear from our debates that one of the most important objectives is the protection of depositors and particularly of retail depositors. Effective arrangements to protect deposits are important if we are to ensure confidence in the banking system. We saw in the context of Northern Rock the close relationship between confidence in the banking system and the moves by depositors to withdraw their funds.
	The decision to put a bank into the special resolution regime rests with the FSA, as set out in clause 7. The Bill states that a bank will be subject to the special resolution regime when it has breached the FSA's threshold conditions, which are defined in the Financial Services and Markets Act 2000 and defined more closely in the FSA's rule book. As currently drafted, the threshold conditions are quite broad. The Minister and I discussed the location of the head office, for example, as a threshold condition, and there are other conditions that apply to insurance companies, for example. I was grateful for the Minister's assurance in Committee that the FSA is considering the threshold conditions.
	We need to see increased clarity about what will constitute a breach of the threshold conditions. The FSA determined that the recent bank failures at Bradford  Bingley, Heritable and Kaupthing had breached the threshold conditions but, two and a half months later, we are no clearer about how they breached those conditions.
	We did not make as much progress in Committee as I had hoped on the question of ensuring transparency about the use to which the Bill's powers will be put. That transparency also applies to the threshold conditions, and I hope that the FSA will bear that in mind when it looks at the issue.
	The special resolution regime established three stabilisation optionsa private-sector purchaser, a bridge bank and temporary public ownership. They will be implemented through the stabilisation powers and the transfer of shares and property. The most controversial aspect of the stabilisation regime is the bridge bank, which is the vehicle that permits the partial transfer of assets and liabilities. That proposal caused the most contention between the Bill as originally drafted and as it stands now.
	We have seen a form of the bridge bank in operation already, with the dismemberment of Bradford  Bingley. Its depositors and other assets were sold to Banco Santander, while the rump of the business has effectively been nationalised by being left to the taxpayer.
	Some hon. Members present today did not attend the Committee stage of the Bill, so it is worth pointing out that the controversy stems from the fact that the partial transfers were regarded as a way to allow creditors' traditional rights to be unpicked by Government action. The rights included the arrangements governing how transactions are settled in the City. Certain types of transactions are covered by agreements that enable deals to be settled on a net basis, according to their balance at the end of the day, rather than on a gross basis.
	Regulatory capital is determined on the same basis, so there was widespread concern that the lack of proper safeguards could mean that there was no legal certainty that in-default transactions could be netted off. That legal uncertainty would have made London a more expensive place to do business and undermined our competitive position. That was one source of the comments made by the financial services sector when the Bill received its Second Reading.
	The Government have taken on board those comments, and their moves in respect of netting off are very helpful. In principle, they are saying that we should follow the path of netting off and then considering exceptions, rather than setting out the qualifying financial contracts at the start. That change has been greeted positively by the financial services sector, and we look forward to the outcome of the consultation process in January.
	Investors have also been reassured by clause 60, which provides mandatory compensation to third parties where there has been a partial transfer. It adopts the principle that no creditors should be worse off than they would have been if the bank had gone into administration or liquidation. Although that is relatively easy to say, it may be difficult to implement in practice, as the process involves a great deal of judgment by the valuer, but it gives creditors some reassurance that their rights will be properly valued.
	We have touched already on the banking liaison panel set out in clause 10, which will include representatives from the tripartite authorities, the FSCS and the financial services sector, as well as people with a particular knowledge of insolvency and financial services law. I have spoken to people in the City over recent weeks and my sense is that they welcome the panel as an effective way to look at the secondary legislation that will be introduced.
	As I said, the Bill is a package: in addition to the secondary legislation that will follow, it sets out in clause 5 a code of practice that will give guidance on the exercise of stabilisation powers and the bank administration and insolvency procedures set out in parts 2 and 3. We saw an early draft of the code while the Bill was in Committee, and I am sure that a further draft will be available to Members in the other place once the consultation process is completed next month.
	The code is important because it sets out the circumstances in which the powers will be used. The greater the clarity about how the powers will be used, the more confidence there will be in the operation of the overall regime, but that also means that there should be much greater transparency about why powers have been exercised.
	I repeat that two and a half months have passed since Bradford  Bingley was subject to a bridge-bank type process, while Kaupthing and Heritable were put into administration at the beginning of October. However, there has not been that much in the way of greater transparency about the process through which the FSA and the Government went to get to that outcome. The financial services sector will learn a great deal from the explanation that is given about the exercise of those powers at that time, and that will enable it to predict more carefully how the powers in this Bill will be used in the future.
	We have touched already on the Henry VIII clause in clause 75, and the feedback that the Minister gave on the comments from the banking liaison group was very helpful. Clearly, however, those in the other place will look at those powers, as that is an area about which they are especially concerned.
	Another part of the Bill that is important in terms of the overall structure of protection for depositors deals with the changes to the FSCS. The scheme is one of the principal means by which we can protect depositors, as it gives them confidence that they will be compensated if their bank goes into administration. That needs to be thought about very carefully as the Bill proceeds through the other place, but part of the problem is that some of the detail about how deposits are to be protected will be dealt with in reforms introduced by the FSA. That is more work in progress, and it shows how difficult these matters are.
	I have spent some time looking at this Bill over the past few months, and I could talk for hours about it. On this occasion, however, I shall desist from going into more detail, although I will say that more work will be done in the other place to streamline and strengthen it. The Bill is important because it should strengthen people's confidence in the banking sector and in London as a place to do business, but it is only one of the measures needed in that regard. Other moves need to be made to restore confidence in the banking sector as a whole.

Colin Breed: I shall be brief, as I know that other hon. Members want to contribute to this relatively short debate.
	It seems a long time since we were in the midst of the Northern Rock debacle, but there has been a very considerable amount of water under the bridge and to some extent the Bill's provisions have been overtaken recently by other events. Nevertheless, the Bill is important and the Minister knows that we support it.
	I do not want to say much on that, save that there are some very welcome aspects. The banking liaison group is a very positive innovation that will be helpful both now and in the future. It also cements the sort of relationship that we need with the City in respect of matters that at times can be very delicate. If we do not get our response right, the consequences could be very profound, and it is important that we bear that in mind.
	The Bill does not cover important issues such as bank liquidity and capital, the appointment and qualification of directors, risk committees and so on, but they will have to be considered fairly soon. Therefore, to a certain extent this Banking Bill is just the first chapter of a continuing work in progress that we will have to keep looking at over the next few months. However, because there is a sunset clause in the Banking (Special Provisions) Act 2008, we have to put something on the stocks and the Bill can do that.
	Inevitably, there are still some concerns about exactly how the provisions will work, and the hon. Member for Fareham (Mr. Hoban) has outlined them. We must hope that many of the provisions will not actually be required. If they are, we could be in a lot more difficulty. The Bill is a bit like bolting the stable door after the horse has gone, but it is extremely important nevertheless that it is on the stocks, although if we have to use some of its provisions we shall be looking at some stark situations.
	We debated the amount for the Financial Services Compensation Fund in Committee and there was some disagreement about whether there should be pre-funding, which is, rightly, not on the agenda at presentclearly, the banks need all the capital they can get. One element that we did not much explore was public opinion. We have to recognise that public opinion is not particularly disposed to the provision of significantly more bail-out money. Although there are some objections to pre-funding, and even about its practicality, the industry has to realise that the idea that it can regularly come back for public bail-outs at much cost will not be sympathetically considered.
	The Bill sets out protection for depositors, which is important. That security, with timely payouts, is right. It was a great shame that the vast majority of the depositors in the Northern Rock queues were already protected under the deposit fund so they did not actually need to worry. They did not know that, because the fund was not particularly well known or advertised, so we need to do some real education following the Bill to make depositors aware of their protections and of what they can expect to happen. We need to give them confidence, so that if there are some ripples they will have a clearer understanding that they are protected, and that they do not have to whiz-round suddenly and take out a few thousand pounds of their hard-earned savings.
	Banks are undoubtedly one of the most capital-hungry businessesthey are always seeking capital. I have concerns that the provisions may set up some hurdles to the capital-raising exercises that will be important. Even if there are no hurdles, the process will be much more expensive than in the past, which will have an effect on the cost of money generally. We need to recognise that there will be genuine costs if banks are unable to amass or attract the capital they will need both for their own stability and also to operate effectively for themselves and for the economy.
	Mention has been made of the significant powers that have been given to the FSA and the Treasury, and there are inevitably concerns about them. The Minister has given us some reassurance, at least in respect of the Treasury powers, which is helpful, although there will always be concern about whether the FSA will use its triggers appropriately. We shall have to see. Overall, the situation is satisfactory. The thresholds for the safeguards may be a little low, but all such assessments are subjective, so it is difficult to prove one thing or the other.
	Our debates on Report were truncated because of the need to prorogue. If we had had the full time, we might have reached the amendment that my hon. Friends and I tabled to deal with the necessity for a sunset clause. Just as the Banking (Special Provisions) Act was sunsetted, we shall need to revisit some of the Banking Bill's provisions in more peaceful times, given that we have been considering it during a crisis-type situation. I hope that at some stage the Government will give our proposal some thought.
	I thank the Minister and other members of the Committee. The Minister was courteous and good humoured in sometimes difficult circumstances. Overall, we support the Bill. We hope that it will be further scrutinised in the other place and that it will reach the statute book before the previous measure expires.

Michael Fallon: I remind the House of my business interest recorded in the register.
	I, too, welcome the Bill, and I do so for two reasons. First, it begins to put the Bank of England back at the centre of our financial system, which the Treasury Committee recommended in its major report on the Northern Rock crisis. Some of the Committee's recommendations have found their way into the Bill; for example, streamlining the court of directors and giving the Bank more explicit power over financial stability. I hope that the Government will follow up those changes by giving the new deputy governor, Paul Tuckerwhose appointment I welcomethe resources he needs to rebuild the Bank's ability to understand what is happening in the banking markets and to monitor the financial system much more thoroughly. That is an important and long overdue change. Those powers and that ability should never have been taken away from the Bank of England.
	Secondly, the Bill makes improvements to depositor protection, as the hon. Member for South-East Cornwall (Mr. Breed) said. I am not quite clear how the arrangements that the Economic Secretary proposes will be superseded by what was agreed in Brussels earlier this month. Perhaps the hon. Gentleman could clarify that. If he does not have time to answer me today, perhaps he could write to me. I understand that there will be an overarching European Union framework for the number of days before depositors are fully refunded, which may be even more leisurely than the arrangements canvassed in the UK. I should be grateful for some clarity.
	We hear constant references to temporary public ownership. What is missing from the Bill is any understanding that the arrangements being made for the ownership or part-ownership of five of our major banks will not be temporary; they will be with us for a very long time. Further legislation may be required, but I should have liked the Government to make an attempt in the Bill to set out some rules about how those public stakes are to be managedmy hon. Friend the Member for Fareham (Mr. Hoban) referred to that point. We have heard that the shareholding is to be directed by UK Financial Investments, which is to be set up as an arm's length body, but it is not clear whether the company will require statutory approval. It is not clear how UKFI will be accountable, although I certainly hope that it will be accountable to the Select Committee. We should all understand that, although the Government keep calling this stuff temporary, it is likely to be with us for a long time, so issues such as competition policysuspended for the nationalisation of the two Scottish bankswill need to be readdressed if we are ever again to have sufficient and proper competition in the banking system.
	I have now twice saidon 17 October and during the Queen's Speech debatethat the various measures produced to tackle the financial crisis have been necessary but are not yet sufficient. More will need to be done to get banking flowing again so that money can reach our home owners and businesses. I welcome the extension of the credit guarantee scheme earlier this week and the Treasury's admission that it will last for five years, not threenothing temporary about that. It could be a very permanent feature of our financial landscape. However, I suspect and fear that even those measures will not be sufficient and the Government may have to revisit some of the features of that desperately short weekend when the Scottish banks were nationalised. Of course, the due diligence was rushed, as I have already pointed out, but some of the terms set out over that weekend may have to be looked at again, because the money and the credit are not yet flowing, which everybody wants to happen.
	That said, I welcome the Bill and hope that it makes it to the statute book in reasonable time, although even if it gets there in February, it will still be 18 months after the collapse of Northern Rock, which is fairly leisurely progress for a legislature that should have responded much more quickly and an Executive who are constantly behind the curve. However, I welcome the passage of the Bill today.

Julie Kirkbride: I, too, will keep my remarks brief. As the Economic Secretary knows, Opposition Members wholeheartedly support the Bill's aims and have been calling on the Government to produce such a Bill for some time, and we therefore wish it a very fair and speedy passage. Of course, we want it on the statute book by February, but in the light of the Governor of the Bank of England's remarks earlier this week, when he set out a rather worrying picture for the future of our banking industry, the best option would be for that to happen as soon as possible. It was somewhat surprising for someone in his position to make things quite so worryingly clear.
	I want to make a few remarks about the Bill. As my hon. Friend the Member for Fareham (Mr. Hoban) said, we should remember how all this started, with Northern Rock some 18 months ago, when our banking system began teetering on the edge, as it has continued to do ever since. One of the reasons why the Northern Rock fiascocrisiscame about was that, under the old rules of banking legislation, when the Bank of England offered emergency liquidity, it had to make that known. That was, in itself, a recipe for the disaster that followed.
	In future, under the Bill's miscellaneous provisions, which seems a minor section in which to put an important provision, such emergency liquidity offered by the Bank of England can remain secret. Clearly, although transparency is something to be desired, in a situation that can cause a run on a bank, as happened with Northern Rock, the new rules are much better, and I am glad that the Government have learned the error of their ways, inasmuch as a rescue will be attempted before the public take fright and start to queue around the block at various branches of whichever bank might be in trouble. I welcome that important provision.
	I agree with my hon. Friend the Member for Sevenoaks (Mr. Fallon) that, although it is nice to see the Bank of England taking more of the centre stage in the regulation of our banking industry, there is more to be done in that respect. There are still problems with regard to the powers of the FSA and the Bank of England. Clarity of decision making is very important in what we now know to be such a crucial part of our economy. We are not letting banks failthey are just too importantand someone therefore needs to be exclusively in charge. I hope that that role will be considered in future banking legislation.
	Finally, my hon. Friend the Member for Fareham, who speaks from the Front Bench, has played a much bigger role in considering the Bill than I have, and I am very glad about that because he has clearly gone into the detail. I was encouraged when he said that there is now broad agreement that the Government have got largely right their provisions for the SRR and that there is much more happiness in the banking industry and among Conservative Members about how that would take place. If I have one concern about this crisis, it is that when it is overit will be over, eventuallythe City of London remains an important institution for UK plc. Although we are very angry with the banking industry for the trouble that it has led us into, we must be careful in any future legislation to ensure that it remains an important part of our economy in future. We must ensure that the City is open for business and is the most attractive place to do so. It is very tempting to penalise the banking industry for how it has behaved and for what it has done, but, although we obviously have to put right what has gone wrong in our banking industry and give people confidence in it in the future, we must keep sight of the broader picture for the UK. We have a lot of jobs in the financial sector, and we want to continue to attract banks to London with fair and rational provisions that govern how any such similar situation will be dealt with.

Mark Field: These are, as the Economic Secretary pointed out, momentous times for this country's banking and financial services industry, which has, as my hon. Friend the Member for Bromsgrove (Miss Kirkbride) has just said, become an increasingly important element of the UK economy over the past two decades. It had importance before, but its status, and, indeed, the knock-on effect of any problems for other important commercial cities and towns in this country, let alone the City of London, should not be underestimated.
	I believe that in an ideal worldperhaps it is fair to say that we are not living in an entirely ideal worldit is important that any legislation is not over-rushed. I appreciate that there have been tumultuous events in the financial markets, and I suspect that that will be so for some months to come. However, in so far as anything is foreseeableI accept that some eventualities are notwe should avoid putting our banking industry into too much of a straitjacket.
	I am also the first to accept, however, that the days in which both I and, indeed, my hon. Friend the Member for Fareham (Mr. Hoban) perhaps talked easily about the idea of light-touch regulation are doneat least, for now. I confess that even relatively sophisticated high-net-worth individualswe have seen what has happened to such investors in one of the world's largest hedge funds in recent dayshave to concede that those days will, I fear, come to an end.
	As my hon. Friend the Member for Bromsgrove pointed out, the future for London's financial centre will not be enhanced by low-regulation arbitrage, vis--vis other financial centres going forward. Clearly, that will not be the spirit of the age for some time to come. I must confess that I am also concerned about the City of London's future role as a world financial capital. We must be entirely candid about the fact that some permanent damage has been done by recent eventsindeed, the same applies to Wall streetand the whole Anglo-American model of financial services will need to be shaken up.
	Clearly, the Bill plays an important part in that process, but we must regard this as work in progress in the weeks, months and, indeed, years ahead. That can only be further undermined by some of the unfolding scandals, and I am sure, I fear, that we have not heard the last of them. Nevertheless, I hope that the Government will take some heed of the quiet concerns of many people in the banking world. Many representations have been made to the Government during the consideration of the Bill, but although they broadly express support for the workings of the Bill, there are some concerns about how the compensation system will work.
	I should like to reiterate the concerns of my hon. Friend the Member for Sevenoaks (Mr. Fallon), who hit the nail on the head. We must look at the whole issue of competition law. Above all, as we have seen with the banking mergers that have taken place and the lack of independence for some banks, there is concern that competition considerations have been flung aside. We are living in tumultuous and difficult times that are bewildering for the public and for policy makers as well; but equally, we must remember that competition law is enacted not as an added layer of regulation but to protect the consumer.
	The bigger concern of many people is that smaller banking organisations and small organisations in the financial services world run the risk not only of perhaps over-contributing to a compensation fund, but of exiting from a lot of markets in the financial services world, simply because of those competition concerns. All too often, enhanced and enlarged regulation is a big barrier to entry for new competitors in what should be a vibrant field, full of innovation and flair.
	My hon. Friend the Member for Fareham rightly pointed out that some specifics will be considered in another place in January in relation to netting and set-off in the context of clause 48, but I should like to say finally that, although this is billed as temporary legislation, there is no doubt that, as my hon. Friend the Member for Sevenoaks said in his contribution, many of these measures will stay in place for quite some time. That means two things: first, we clearly need to give very great consideration to what we put on to the statute book at this stagethat has happened here and will happen in another place in the next few weeks of the parliamentary Sessionbut, more importantly, we recognise that this must be work in progress. I hope that the Government will pay great attention to what is being said in the banking and related industries to ensure that, where unforeseen problems arise in relation to the legislation, they are fully and properly dealt with.

Charles Walker: I am grateful for the opportunity to speak in the debate on the Third Reading of this important Bill, which comes at an important time in this country's financial history. I, too, am delighted that the Bill will put the Bank of England back at the centre of regulation. There is further to go, but I must confine my remarks to the contents of the Bill.
	I note that the Bill proposes an increased regulatory role for the Financial Services Authority. There are still huge concerns among Conservative Membersand, I am sure, among Labour Membersabout the suitability of the FSA to deliver on that enhanced role. The FSA seems to have missed all the warning signs leading up to the banking crisis and all the warning signs in the mortgage market, and there has been a simple loss of confidence in its ability to deliver on its important role. A few moments ago, I was talking to my hon. Friend the Member for Sevenoaks (Mr. Fallon) about the need to restore confidence in the regulatory regime. What happened at Northern Rock must not be allowed to happen again, and the Bill goes some way towards ensuring that it will not. My hon. Friend pointed out that the run on the bank happened because, despite assurances from the Government, the FSA and the Bank of England that there was nothing to fear about losing deposits and that those deposits were safe, the public quickly worked out that no one was in charge. As we move forward, we need someone who is seen to be in charge of regulation, so that the buck stops with him or her. I hope that the Bill sets those wheels in motion; if it does not, I am sure that we will revisit the subject in the very near future.

Andrew Pelling: I wish to declare some of my interests. I hope that NatWest will continue to provide me with its overdraft. I am a Royal Bank of Scotland pensioner, prospectively, and I hope that it will be able to pay out on that pension. More importantly, I have an interest in the City, working for Tokai Tokyo Securities, which covers some borrowers in the markets, including, now, some of the UK banks.
	When one sits down here in solitary at the end of the Chamber, there is a danger of having over-profound thoughts, but I want first to make some more fundamental remarks about the implications of the Bill. Over time, the Government undertook an excellent preparation for the Bill as regards the consultation that went with it. That was a useful process that means that it will be robust in terms of dealing with the crises that will come next year. We would all hope that it will not be necessary to employ this legislation, but it is inevitable that there will be further nationalisations with the oncoming second leg of the financial crisis after Christmas.
	The Bill gives additional powers to the Bank of England. It has to be asked, bearing in mind the significant failures in recent years, whether that is the right route to take. I appreciate that we have to work with the institutions that we have, and that there is only so much progress to be made by criticising the Bank and the FSA. However, the Bill represented an opportunity to give the Bank responsibilities for asset prices; obviously, that concern will now be on the downward side rather than on the upward side. The Bill should also have given more support to maintaining the banking department of the Bank of England, which is being wound down, rather extraordinarily at this time of a banking crisis. An opportunity should have been taken

Madam Deputy Speaker: Order. I remind the hon. Gentleman that passing reference to what is not in the Bill is allowed, but he must now concentrate on what is in it.

Andrew Pelling: I think that I will take this opportunity to desist, Madam Deputy Speaker, because colleagues look keen to move on to the next business of the House.
	In conclusion, good work has been done in the Bill to provide the basis of speedy intervention in any future banking crisis. However, I hope that the Government will consider the introduction of the means to set up a bad banka solution that could deal with the crises that will be upcoming in the next two months.
	 Question put and agreed to.
	 Bill accordingly read the Third time and passed.

Charles Walker: On a point of order, Madam Deputy Speaker. I do not want to try the patience of the Chair, but over the past few weeks I have received many cards from people saying Season's Greetings. Can you confirm that this House is rising for the Christmas recess, not a seasonal recess, and will you join me in wishing all hon. Members a very happy Christmas, as we would wish them happy Diwali, happy Hanukkah, or happy Eid?

Madam Deputy Speaker: The hon. Gentleman is correct in as much as this House will be adjourning tomorrow for the Christmas recess. I thank him for his kind remarks on my behalf and on behalf of the other occupants of the Chair.

Value Added Tax

Vincent Cable: I beg to move,
	That an humble Address be presented to Her Majesty, praying that the Value Added Tax (Change of Rate) Order 2008 (S.I., 2008, No. 3020), dated 24 November 2008, a copy of which was laid before this House on 24 November, in the previous Session of Parliament, be annulled.
	Let me move on from the end of term spirit to a very serious issue, which is the motion to annul statutory instrument No. 3020 relating to value added tax. There are two reasons to be concerned about the VAT change, and we want to register that fact from the Opposition Benches. Some people do not believe that there should be a fiscal stimulus or think that it would be damaging; I expect the Conservatives to make that case in due course. My approach and that of my colleagues is somewhat different: we have no objection to the principle of a fiscal stimulus, but we think that this is a bad one that is not likely to be effective even on its own terms.
	Perhaps I should start with the Chancellor's own language in the pre-Budget report, when he declared:
	I have decided that the best and the fairest approach is a measure which will help everyone[ Official Report, 24 November 2008; Vol. 495, c. 483.]
	and said that he proposed to give back some 12.5 billion to consumers. Our view is that that is not the best and fairest approach, that it will not help everyone, and that it certainly will not give 12.5 billion back to consumers. That is not to say that it is completely hopeless. There is a case for providing a fiscal stimulus through this measure that does not rely on best or fairest or consumer stimulus. It is a somewhat mechanical approach. What will happenwe can already see it happeningis that this measure will be absorbed in increased retail margins for everything from small shops to Sainsbury's, Asda and Tesco. Of course, that is putting money into the economy; no doubt if Tesco earns a little bit more profit as a result, that will be reflected in its share price and feed through into pension funds. If the Government had been honest with us and said, Actually, this has got nothing to do with helping the consumerit's all about putting 12.5 billion into the economy in the quickest way we can think of, and it's marginally better than dropping money from helicopters, we would find it difficult to quarrel with the logic. However, they have not done thatthey have grossly overstated their case, and so we need to have a look at it and at its weaknesses.
	The policy makes extraordinarily optimistic assumptions about the course of the economy. It assumes, as was said in the pre-Budget report, that we expect a recovery in 13 months from now. Because of that very optimistic view of the course of the British economy, this measure could have some perverse and negative consequences that were clearly not thought through in the Treasury. As we approach the end of next year, most people will have to look forward to an increase in VAT that may be greater than a return to 17.5 per cent.to reopen the whole issue of what the Government really intendedas well as an increase in income tax, although it is called national insurance. Most rational consumers will calculate that they face a reduction in real income and adjust their budgets and spending patterns accordingly.
	There is another, more subtle effect at work. Most economic forecasters now expect that next year we will see something that we have not seen for decades, possibly generationsnamely deflation, whereby prices fall as they did in the 1930s and at various times in the 19th century. That is now factored into the assumptions of some of the money markets, so the Americans talk about it quite openly.
	In a deflationary world, prices fall. When consumers see prices falling, they hold back from spending, so the VAT cut has the perverse effect of encouraging deflationary expectations. That encourages people to spend less, rather than more. Those are two possible perverse consequences of the measure. I am not predicting that that would happen, but before we glibly assume that the VAT cut is simply an injection of consumer spending, I am pointing out factors that could work in the opposite direction.
	Secondly, on the impact of consumer behaviour, we need to take into account the fact that we are talking about a very small change. Mr. Steinbrck, the German Finance Minister who has often been quoted in the Chamber in the past few weeks, chose a singularly unhelpful example: he asked, rhetorically, whether people would respond to a change in the price of a DVD from 39.90 to 39.10. That is quite a good example, and I can give others: one that I have quoted in the past is the 5 off the 220 flat-screen TV from China. There is also the example of 60p off a 25 meal. One can question how much that is likely to influence the behaviour of a rational consumer.

James Plaskitt: Will the hon. Gentleman explain why he is opposed to giving a typical household in his constituency a tax break of 300 next year? That is what the VAT reduction does.

Vincent Cable: I shall go on to explain that we would provide the tax cut in a better, fairer and more effective way. My colleagues and I are not opposed to cutting taxes for our constituents; we just think that the tax cut could be done more intelligently and in a more targeted way.
	There is another cost factor related to the smallness of the cuts. Many shops are discounting aggressively. In an environment in which shops are cutting prices by 20, 25 or 30 per cent., the effect of the change in VAT is invisible and therefore likely to have very little impact. Before I leave that point, there are a couple of issues that I would like the Government to address. The first is a very specific but important point raised by the British Retail Consortium, which has been thinking ahead and worrying about the effect that the change will have at the end of next year. It has said:
	Retailers are extremely concerned at the Government's intention to end the temporary VAT reduction on 31 December 2009. This would fall in the middle of the post-Christmas sales, one of the most important times of year for the retail industry...We believe that Government should reconsider the end date with a view to extending it by at least a month.
	Whatever general arguments we make about the retailing impact, that is a specific technical point that I hope the Government will have taken on board. Of course, the change that the British Retail Consortium suggests would not affect the overall arithmetic.

Philip Hammond: On that specific technical point, has the hon. Gentleman noticed that the order that we are debating has an end date of 30 November 2009? The Government are relying on other legislation, not yet laid before the House, to extend the VAT reduction until 31 December.

Vincent Cable: I hope that that is a sign that the Government have an open mind about when the boom is due to occur. That is a helpful intervention, and it points to some of the inconsistencies involved.
	I have a final point to make about consumer impact. One particular sector concerned about how the tax change will feed through is road hauliers, who can of course get relief from value added tax but who will be paying increased duty on their fuel. The issue is of particular concern to hauliers operating in rural areas, and the retailers who depend on them for their supply. I wonder whether the Government have thought about the cost implications of the fact that the combination of changes to VAT and to vehicle excise duty will particularly affect rural distribution. That is of concern to many of my colleagues and to people in other parts of the country.

Stephen Williams: On the subject of costs to business, I wonder what estimate the Government made of the cost to small businesses, most of which will account for VAT quarterly. They will have suffered VAT at 17.5 per cent., but will recover it, in the fullness of time, at 15 per cent., so they will suffer a cash-flow disadvantage in the short term. They will also face real costs as they reconfigure their accounting and invoicing systems and reprint all their marketing materials. So they face real cash-flow costs and an actual cost when the change is implemented.

Vincent Cable: My colleague eloquently made a point about the administrative costs of the change, particularly for small businessa point that I wanted to make in slightly more detail. As he rightly points out, in this country, 2 million companies are registered for VAT, and many of them will have the kind of practical problems that he describes, which clearly were not anticipated in the Treasury.
	The Government acknowledge that the compliance costs of the measure will be 300 million. Of that, 90 million is simply the cost of conversion; it is 50 million to cut the VAT and another 45 million to convert it back again. We are talking about an enormous administrative cost, particularly to small business, in terms of managerial time and practical problems of conversion. That will substantially reduce much of the benefits. My hon. Friend mentioned some of the problems, and I shall cite a couple more from my constituency. A local garage, Broad Lane Garage, wrote to me, without any prompting from me, to say:
	This imposed change has caused us, as a small business, great inconvenience and some expense...we have had bookings cancelled...The change to our systems has taken several telephone conversations and will ultimately require someone to come into the office out of their normal working hours to make the necessary alterations to our computer system.
	The company asked me to use all my efforts to communicate those views to the Government. If necessary, it will organise a petition for me, without my having asked for it.
	A computer software company described some of the specific, practical problems that a company is likely to have as it works through the transition. A business man in Twickenham said:
	This VAT change is a potential disaster for businesses like mine. We run an IT company and we have just 4 days to get all our customer systems changed over. All our cash flow comes in from standing order mandates...Re-signing customer payment authorities is always difficult and the government have now given all business people particularly SMEs a real problem...If my customers take the opportunity to stop their payment mandates while they wait for us to issue new invoices with the VAT adjustment...it will be catastrophic for us and a good profitable technology business will be sacrificed for no good reason at all.
	I suspect that there are many arguments of that kind being aired in companies around the country.
	The final criticism that I want to make is about the Government's claim that the VAT cut is the fairest approach. There are very simple ways of testing the proposition that a tax change is fair. The Institute for Fiscal Studies will run through different tax changes to demonstrate their impact on different income groups. It has done that and points out that the impact of the VAT change on the richest 10 per cent. of the population will be to make them 1.6 per cent. better off, and the impact on the poorest 10 per cent. will be to make them only 0.6 per cent. better off. Obviously, most of the commodities most used by people in low-income groups, notably food, children's clothes and energy, at least at a lower rate, are exempt.
	My final pointthis partly refers to the intervention from the hon. Member for Warwick and Leamington (Mr. Plaskitt)concerns the alternative that we would advance. As I said at the outset, we do not believe that the Government should do nothing; there is a case for a fiscal stimulus. There are two elements to our answer. First, there are tax changes that are desirable. We have argued for a progressive change in the income tax system, cutting taxes for people at the bottom end of the income scale and raising them at the top by changing the system of allowances. That would have a differential effect on spending. It would be tax-neutral; it would not affect the deficit or public debt. However, it would provide a stimulus to the economy.
	The Institute of Directors has surfaced as an improbable ally, saying that
	an income tax cut would have put significant cash directly into pay packets, ensuring that people noticed and providing a more effective stimulus.
	The argument that one should use the income tax mechanism rather than VAT has broad support in that sense.

Frank Field: May I just ask whether the institute supported the idea of raising taxes on the rich?

Vincent Cable: I do not think it did, so the right hon. Gentleman could accuse me of quoting selectively; I did on that occasion.
	Tax is one mechanism. The other mechanism that provides a much more direct fiscal stimulus is the use of public investment. We welcome the bringing forward of public works projects, but I noted in an earlier intervention in the Chamber that the overall effect of the Government's proposals in relation to capital spending is to reduce Government public investment over the next few years, which is not the kind of support that will be needed in what I fear will be a prolonged recession. We ought to be discussing in more detail the kind of measures that can be undertaken in relation to social housing, which is currently frozen because of the difficulties in housing associations, to which I referred in Prime Minister's questions; the opportunity to roll out much more effectively a programme of home insulation, which is happening at a snail's pace; investments in public transport, and others.

James Plaskitt: I thank the hon. Gentleman for taking a further intervention. Does he not see a problem with fairness in his argument? Half of pensioner households already do not pay income tax. The VAT reduction is worth 150 a year to them. Why is he against a 150 tax break for pensioner households?

Vincent Cable: Clearly, supplementary measures are needed to deal with pensioners and people who are not in the tax bracket. I was referring to an overall package that would be a good deal fairer than the one proposed by the Government, and more effective in the long term because it would be built into people's expectations.
	I finish by continuing a point that I made on Monday. The argument about how to stimulate the economy is moving on very fast. We are talking about cuts in interest rates and about fiscal policy. The Americans are already talking about quantitative easing, which is printing moneythat is, dropping money from helicopters. That is the kind of environment that we are getting into. When we reconvene in the new year, I expect that the debate will have moved on to more dramatic and potentially dangerous departures in policy. Although the statutory instrument will undoubtedly inject some demand into the economy, it is seriously defective and we intend to vote against it.

Frank Field: I am delighted to follow the hon. Member for Twickenham (Dr. Cable). I want, if anything, to add a sense of urgency to the case that he deployed. As we were reminded, we rise tomorrow for the Christmas recess, and when we return the economic landscape will have changed even more than it has in the past few weeks, and will have changed much for the worse.
	Our debate today should concentrate on the most effective way the Government could spend any extra money that they might consider spending, so that many of the firms that currently employ our constituents have a chance of getting credit and opening after Christmas. Unless we radically change the credit lifelines to many firms, a considerable number of our constituents will not have firms to go back to after Christmas.
	The sense of urgency that I hope we will demonstrate in the debate comes from the statistics that we already have. We know, for example, that in the worst slump in 100 years, national incomeGDPfell by 5 per cent. We know that probably the most accurate estimate shows GDP already falling at a rate of 4 per cent. and escalating. One hopes that the Government are right, that this is just a temporary blip, and that things will change. I fear not. I fear we may be entering a period of the most severe economic chaos that anyone alive can remember, and we need to judge whether the VAT increase is in any way appropriate as the stimulus to counter that downward trend.

Tim Boswell: Does the right hon. Gentleman agree that the real viciousness of extreme deflationary conditions is not so much the statistical decline in GDP, which he is right to emphasise, as the entirely disproportionate increase in unemployment that is already becoming evident and is likely to accelerate in the coming year?

Frank Field: That is my next point. I am grateful that I gave way, not because it is not always a pleasure to do so, but because my hon. Friend the Member for Sunderland, South (Mr. Mullin) told me that I spoke about a VAT increase, when we are, of course, debating a VAT decrease. Given the crazy economic world we are in, it may well have been an increase, rather than a decrease. I am immensely grateful to him for that.
	The data published today on unemployment show just how serious the situation is. If we turn to the appendices in the pre-Budget report and look at the set of statistics to which the Government have nailed their colourslevels of unemployment at the end of next yearwe know that with the benefit count passing the million mark today and the International Labour Organisation rate coming up towards 2 million, sadly those thresholds will be crossed much earlier than the Government hope and that the pre-Budget report suggests. I believe the Government have very limited room for manoeuvre in a reflationary package, so I again question whether the VAT decrease is the appropriate policy response. For those reasons I shall vote against the Government today.
	There are two huge pressures limiting the Government's room for manoeuvre, the first of which is the sheer size of the debt that they hope to raise in the gilt markets. I am less optimistic than most people about the Government's ability to raise that debt. Long-term interest rates will certainly be pushed up, which will damage economic recovery as a result of seeking that level of debt, and we may have the horrendous scenario in which the Government cannot sell their gilts. Then, we are in a new ball game. The Bank of England will clearly be instructed to buy those debts, and again the outcome at which the hon. Member for Twickenham hinted will be upon usthe printing presses will be rolling to pay for that, with all the consequences if one major country operates that policy in isolation from others.
	What the Government can do is restricted by debt. Unlike most people, I believe that we face a threat of inflation. I do not understand how the Bank of England keeps talking about deflation. Oil prices in the spot market are rising substantially. We know about the fall of sterling in normal circumstances, and we may say that these are not normal circumstances. The fall in the value of sterling already would put 2 percentage points on inflation. It is an illusory luxury to believe that somehow next year the economy will be faced with a negative rate of inflation, rather than a real inflationary threat. That will certainly put a stop to a Government strategy of wishing the Bank of England to cut interest rates.
	Given the limited resources at the Government's disposal, is a reduction in VAT the most effective way of trying to mitigate the economic hurricane that is already beginning to affect our constituents and will affect many more after Christmas?
	I disagree with the policy of increasing public works advocated by the hon. Member for Twickenham. I am always delighted to see my right hon. Friend the Financial Secretary on the Treasury Bench, but never more so than now, because I want to suggest that public works, sadly, have a far more limited role to play in recovery than one might think. The biggest public works programme is the Olympics. In the two and a half years since the Olympic programme was announced, with huge investments from taxpayers and lottery players, the London borough of Newham, part of which my right hon. Friend represents, has issued more than 50,000 new national insurance numbers to non-British workers.
	The idea that increasing public sector investment programmes will lead to a significant increase in the employment of British workers, sadly, is a fallacy. That raises long-term questions about what our schools are doing if they are producing people who cannot get or hold down those jobs, but that is a debate for another day. I do not believe that using moneys to increase public investment is a viable or effective option for the Government to pursue to prevent an horrendous scenario engulfing all too many of our constituents.
	There is, however, one thing that the Government can do, and before Christmas: reallocate the money that would be lost on reducing VAT and use it to try to extend, even more effectively, credit lines to firms that will not open after Christmas if they do not get credit lines before it. The situation is that serious.
	The Government are taking some measures, and I rejoice in that fact. However, it is clear, from reports of employers in our own constituencies and from what is happening to world trade, that something most alarming is happening. I shall state again a fact that I cited in the debate on Monday: the rates for shipping and for transporting goodsto China, for example, which we hope will still be an engine for getting us out of this slump or recessionare one tenth of what they were last year.
	That is not because the Chinese economy is seizing up, although it may well do, but because people who have goods that they wish to sell in the export market are worried about whether they will be paidin other words, about whether the bills of exchange will be honoured. In that context, we should concentrate all our attention on ensuring that we extend the lifeline to those firms, and we could do that before Christmas. For that reason, and the others that I have briefly tried to marshal, the Government should take that course with the money that they plan to allocate to reducing VAT.
	Like the hon. Member for Twickenham, who moved the prayer against this order, I believe that cuts in VAT are like spitting in the face of an economic hurricane. They will have no effect whatever, given that firms are already cutting prices by up to 50 per cent. in an attempt to survive. I beg the Government to reconsider. Nobody doubts their genuine intention to try to protect as many of our constituents as possible from the awful consequences that are beginning to unfold before our very eyes and from the horrendous unemployment that we will see after Christmas, and that has already begun. We cannot stop that, but we could mitigate it. Many of the firms in our constituencies that will not open after Christmas unless they get credit could get it if the Government used the money more effectively.
	We Members have secure employment, at least until the general election. I hope that we will act this afternoon to try to protect the jobs of the people involved and give them something like the sense of security that we have as Members of Parliament. We should, if need be in the Division Lobby, persuade the Government that the billions to be used for reducing VAT could be far better used to make sure that emergency credit lines are extended to firms that will otherwise fold and add enormously to the unemployment totals in the new year.

Madam Deputy Speaker: I now have to announce the result of a Division deferred from a previous day. On the motion relating to the Christmas adjournment, the Ayes were 266 and the Noes were 214, so the Question was agreed to.
	 [The Division list is published at the end of today's debates.]

Philip Hammond: In our response to the pre-Budget report statement, in the emergency debate that followed and in many other forums, we Conservatives have made it clear that we oppose the Government's so-called fiscal stimulus package, which involves borrowing yet more billions to deliver the temporary VAT cut that we are debating today. We will therefore vote against the order, although as the hon. Member for Twickenham (Dr. Cable) said, our reasons for doing so are different from his.
	There seems to be a disconcerting and growing gap between the economic scene as viewed by the Prime Minister and the picture that greets everybody else. The Prime Minister denies any responsibility for the problems facing the country; he claims credit for Britain's being well placed to meet them. He is apparently blind to the mounting evidence that his solutions, far from having saved the world, are not working. Instead of recognising the policy failures that led us to our situation today and addressing the real problem that faces our economy nowthe seizure of the credit systemhe has chosen to embark on a reckless exercise that will increase debt through yet more borrowing to fund the temporary VAT cut, which just about everybody except him agrees will be the least effective stimulus to the economy. It is the Prime Minister all over: unaffordable and ineffective.
	The view from within the Downing street bunker seems to go something like this. Due to circumstances entirely beyond its control, a Britain in which boom and bust has been abolished is the completely innocent victim of a foreign-inspired recession. But thanks to the Prime Minister's prescience in borrowing and squandering vast amounts of money in the years of economic growth, Britain faces the recession with the largest budget deficit and the most unbalanced economy of any developed country. According to the Prime Minister, those conditions make us uniquely well prepared to weather the economic storm.
	Having already saved the world banking system, the Prime Minister naturally considered carefully the challenges that this foreign recession presented to the British economy and decreed that his rather dusty textbook dictated a dose of Keynesian fiscal stimulus to get the country back on track. According to him, his prescription was instantly endorsed by the entire leadership of the free world, assembled for the specific purpose of receiving his guidance. With that reassurance behind him, he returned home and used his well known and unique powers of empathy with the British people to conclude that the best way to stimulate them was to offer them a short-term cut in VAT with the promise of a massive increase in taxation just as the economy is struggling to break out of the recession and resume growth.
	The reality of the situation that we face is rather less rosy. The Prime Minister has lectured our neighbours for a decade about the superiority of his management system, but his chickens are coming home to roost. This recession is notas he would have us believean external shock to an otherwise fit, lean and healthy economy momentarily blown off course by a foreign disturbance, but rather a warning symptom of the underlying sickness of an economy that has become bloated on record levels of public and private debt.

Tim Boswell: On the assumption that, as we have often been told, left talks to left, is it not particularly remarkable that Herr Steinbrck of the Social Democrats described the Prime Minister's whole exercise as crass Keynesianism that, in his words, will take a whole generation to pay off?

Philip Hammond: My hon. Friend is absolutely right; unsurprisingly, perhaps, I shall come to Mr. Steinbrck in a moment.
	Far from being well prepared, Britain is uniquely vulnerable to the reality of a bust that has followed the illusion of a boom. Unlike their neighbours and competitors, which used the good years to pay down Government debt, our Government went on borrowing, so that we are entering the recession with a huge structural deficit. On top of that structural deficit, we are going to pile the additional borrowing that the automatic stabilisers naturally deliver in a recession. We shall get to more than 100 billion of borrowing next year, even before the Prime Minister's proposed fiscal stimulus is added. That will double our national debt to 1 trillion. That leaves us not well prepared, but, in the words of Alan Greenspan, more vulnerable than any other major economy.
	In the words of the Minister for the Olympics just two days ago, Britain now faces
	a recession deeper than any that we have known
	deeper than those of the 1980s and 1990s. That is the prediction of a senior member of the Prime Minister's Government. People do not need to go to Germany, as my hon. Friend the Member for Daventry (Mr. Boswell) suggests, for a verdict. They do not need to go to Brussels, to the European Central Bank or even to the currency markets, which are sending a pretty clear signal. They do not need to listen to the Opposition to get a verdict on the Prime Minister's policy; they can hear it openly and publicly expressed by one of his own senior Ministers.
	Leaving that Minister aside for the moment, the Prime Minister seems mainly to be basing the justification for his policy initiative on the endorsement he claims to have from foreign observers. He says that everybody except those on the Conservative Front Bench supports his plan for a fiscal stimulus funded by yet more borrowing, so I have been looking at what various people have actually said about the Prime Minister's proposals, and I have discovered that, on his definition, the Conservative Front Bench has turned into rather a broad church. Indeed, it welcomes the German SPD Foreign Minister who said:
	Just because all the lemmings have chosen the same path, it doesn't automatically make that path the right one.
	For political balance, he would be joined on our Front Bench by the CDU budget spokesman, who says:
	The tremendous amount of debt being offered by Britain shows a complete failure of Labour policy.
	Next along would be the president of the European Central Bank, who explained that fiscal policies need to ensure the longer-term sustainability of public finances, implying for some countries that there is no leeway for fiscal loosening. He says:
	You have unfortunately countries that have already no room for manoeuvring. In those particular cases fiscal activism, instead of having a positive impact on the economy, could harm confidence.
	And the EU Commissionan unlikely joiner of our Front Benchsays:
	It is clear that not all Member States are in the same position. Those that took advantage of the good times to achieve more sustainable public finance positions... have more room for manoeuvre now...For those Member States, in particular those outside the euro area, which are facing significant imbalances, budgetary policy should essentially aim at correcting such imbalances.
	I do not think that there could be a clearer or more specifically targeted reference to the UK without naming it directly.

Graham Stuart: My hon. Friend will remember that the last time we had a Labour Government we needed to be bailed out by the International Monetary Fund, such was the deterioration in the economic reputation of this country under Labour at that time. Does he fear that with the increasing spreads on insurance of UK Government debt, that this Labour Government could be threatening our very ability to stand as an independent nation?

Philip Hammond: The immediate threat is to our ability to borrow in the markets, as the right hon. Member for Birkenhead (Mr. Field) said. I was reminded by someone at IBM a few weeks ago that in the 1970s a serious scheme was being put together that would have had IBM borrowing in the markets, because it was able to do so, and then lending at a margin to the British Government, who could not do so. It is now the case that a significant number of companies are able to borrow on more favourable terms than the UK Government.

Frank Field: Might I remind the hon. Gentleman that he has been speaking for longer than the hon. Member for Twickenham (Dr. Cable) spoke in moving the motion, and during that time we learned why the Liberal Democrats disagreed with the Government's strategy and what they would do? Might I suggest that the hon. Member for Runnymede and Weybridge (Mr. Hammond) finds some time to tell us what the Opposition would do in these circumstances?

Philip Hammond: I am grateful to the right hon. Gentleman for his helpful suggestion, but with your permission, Madam Deputy Speaker, unless Mr. Speaker is minded to place a time limit on contributions to the debate, I will make my point in my own way. Unlike the hon. Member for Twickenham, who essentially agrees with the concept of a fiscal stimulus, but disagrees with the way in which the Government are proposing to deliver it, we have a fundamental disagreement with the Government's approach and I am seeking to explain why.
	We are considering the temporary VAT cut because the Prime Minister has boxed himself into a corner. Having proclaimed his recapitalisation of the banking system not merely as successful in Britain, but as the instrument of world salvation, he has an understandable difficulty in acknowledging the small technical problem that it is not working. Banks may have been saved from collapse, but the test of the success of the taxpayers' intervention is whether credit has begun to flow in a normal, sensible and measured way through the veins of the economyand it has not. Businesses large and small cannot borrow, the housing market is at a standstill, car sales have fallen off a cliff as consumer confidence is shattered, unemployment is soaring, business failures are accelerating and home repossessions are climbing ominously.

Douglas Hogg: My hon. Friend says that the Prime Minister has boxed himself in, and I agree with that, but he has done so in one particular way. He cannot rely on the fiscal stimulus because of the level of debt that he has created. Had he not created that level of debt, he would have been able to pursue his fiscal stimulus.

Philip Hammond: My right hon. and learned Friend is absolutely right, and the Prime Minister has boxed himself in in another way. He is now unable to recognise that the banking recapitalisation has not delivered the intended outcome. Urgent attention to the banking and credit system is what is actually required to get Britain back on track and to save the sort of businesses that the right hon. Member for Birkenhead was talking about.
	The Prime Minister is unable to acknowledge that his banking rescue package now itself needs rescuing, and desperate to maintain momentum, he has produced this fiscal stimulus, not on the basis of a clear analysis of its impact on the British economy, but on the basis that some economists and politicians in other countries recommend such a measure in the very different circumstances of their own economies. He is spending more money that he has not got, piling up yet more burdens for future generations and placing the economic recovery at more risk. It seems that action has become an end in itselfhyperactivity as Government policy.
	Our position is that Britain cannot afford this extra borrowing, and its problems will not be solved by this temporary VAT cut. What Britain needs is carefully thought out measures that address the real problem, which is the lack of credit in the economy because of the failure of the bank recapitalisation programme. It needs measures such as our national loan guarantee scheme, which would get banks lending to businesses again, and sustainable measures to deliver permanent tax cuts through restraint in public spending increases once the recession is over. What we have from the Government is a package that has stimulated no one, but will cost everyone.
	The hon. Member for Twickenham correctly pointed out that shops in the high street are offering 10, 20, 30 or 40 per cent. discounts, and that this small VAT change is unlikely to have any significant impact. I have just been handed some figures from the CBI survey of retailers, which has come out today, and they show a ninth consecutive month of falling sales. Those figures cover the first fortnight of the Christmas trading period, including the first 10 days of the Government's VAT cut. A net balance of 55 per cent. of firms say that their trading is worse than expected, and the trading record is the weakest recorded since the survey began in 1983. Although the VAT cut will not deliver the Government's hoped-for benefits, tax increases for everyone earning over 20,000 by 2011 will deliver a disincentive to spend and a disincentive to resuming consumer confidence in the economy.
	This policy is not an economic recovery package, but a political survival plan. To quote the German Finance Minister again:
	the speed at which proposals are put together under pressure that don't even pass an economic test is breathtaking and depressing.
	If it is breathtaking and depressing for someone who will not have to pick up any of the bill, how much more breathtaking and depressing is it for British taxpayers? He continues:
	All this will do is raise Britain's debt to a level that will take a whole generation to work off.
	I could not have put it better myself.
	The Prime Minister dismisses the German Foreign Minister as playing politics, but that is precisely our charge against the Prime Minister. He is ignoring the long-term economic best interest of Britain for his own short-term political gain. Everything is politics: the 18.5 per cent. VAT rate that he was going to levy on us after 2011 was suppressed and kept secret at the last moment, leaving a black hole in the PBR, so we are left guessing where and how the burden will fall when the recovery comes.
	We face a recession born of a credit crisis. The Prime Minister's banking recapitalisation has failed to stop the rot. Businesses and consumers are sliding closer and closer to the precipice, but he refuses to act where action is needed. We have put forward a detailed package of proposals that would tackle the real problems. We have even produced a draft Bill to establish the national loan guarantee scheme, but instead of taking up our ideas to make the bank bail-out work, he has turned his back on the consensus that existed when it was announced and instead pursues a mechanical, textbook-led approach that is simply not affordable or appropriate and which will not be effective in his Britain, where consumers are over-borrowed and starved of credit, facing certain tax increases in two years' time, fearful for their jobs and seeing the value of their assets shrinking.
	We will not support today's ill-conceived measure or the billions of pounds of extra borrowing and future taxes that it will entail. I urge my right hon. and hon. Friends to vote against the order in the Lobby this afternoon. I also hope that those on the Labour Benches who for whatever reason reject the Prime Minister's packagethey might not agree with our analysiswill join the right hon. Member for Birkenhead and find the courage of their convictions when we vote this afternoon.

Several hon. Members: rose

Madam Deputy Speaker: Order. May I remind hon. Members that this debate has to conclude at 5 minutes past 4 and that within that time it will include a contribution from the Minister? I therefore hope that hon. Members hoping to catch my eye will exercise some self-discipline.

Tim Boswell: Thank you, Madam Deputy Speaker, I shall do my best.
	I greatly welcome the contributions that have been made so far, which include contributions from those on the Conservative and the Liberal Democrat Front Benches, with their slightly different perspectives on the solution. Without wishing to put him in an invidious position, I also include the contribution made by the right hon. Member for Birkenhead (Mr. Field), who offers both his frank and trenchant analysis and his readiness to consider alternative solutions, which will impress us all. It happens, coincidentally, that on this occasion I agree with almost every word that he said about what should be done.
	I hope that I can indulge the House for a moment and take hon. Members back down memory lane. In the early 1970s, in the days when VAT was being conceived, I happened to be the head of the economics section at the Conservative research department and was, as it were, party to some of those initial discussions. Without going into the details of those discussions, I can tell hon. Members that two things were clear in principle: first, that any tax should have a broad coverage at a relatively modest rate; and secondly, that the rate should enjoy a degree of stability, which meant that we could not keep chopping and changing it.
	That was essentially a wise judgment and, in fairness to Governments since, that practice has continued. Since that period, there have been virtually a handful of changes in the VAT rate, until now, when we are, in effect, committing ourselves to two changes in one year. The measure should be called the Value Added Tax (Changes of Rate) Orderone change down and one change either back to the existing level or, as is more likely, in view of what we have been told by accident, upwards from that level.
	Let me make another point in parentheses. The history of the '70s, which was not very happy for Labour Governments, as has already been adverted to, shows a regular recourse to the fiscal regulator. Taxes were increased or decreased by 10 per cent. at a time by order. Those changes were designed to stimulate or curtail growth in the economy, but their effects were always well below the expected level of efficiency. That, I fear, will be the fate of today's measure.
	My other point goes to the politics of the thing. My political mentor, the late Iain Macleod, who sadly died before the introduction of VAT, always used to say, in his generous way, that he was not inclined to shoot even a one-legged Santa Claus, which is both a seasonal and, I hope, a material political reference. Of course it is difficult to cast oneself as the person who wants to say no to a proposal to cut taxes. The question is whether that proposal will help the economy. Is it the most effective way of stimulating the economy to deal with the consequences that the right hon. Member for Birkenhead was so right to mention or not? That is the real test of the measure.
	I want to say a couple of things about the detail of the order, because I was so impressed by representations that I received this week from a constituentI have his permission to quote from his letter to me. His representations encapsulate in detail exactly the kinds of problems that will arise. Andrew Overton runs a company in my constituency called Overview Mapping Ltd, which provides vehicle tracking solutions for big fleets of vehicles and employs some 15 employees. In fairness, I do not wish to give all the details of the company's commercial situation, but it is fairly easy to derive from its turnover, the amount of tax revenue that Mr. Overton is already paying and the scale of his business.
	Mr. Overton quotes me a figure for the decline in new sales for his business from pre-existing levelsthat is, pre-credit crunch levels. In general terms, new sales have fallen by an order of magnitude, going from a rapid expansion to a virtual standstill. That will give the House some indication of where Mr. Overton stands. My concern, which he illustrated to me in figures, is about the likely cost of the change. His business model relies on monthly direct debit payments, on about 3,000 monthly collections. They are collected by a firm called Eazipay Ltd and processed for him. In effect, Mr. Overton acts as a conduit for VAT.
	Let us look at Mr. Overton's costs. The cost of one man-week of time to effect the changes is 500. The cost of amending 3,000 direct debits, at a standard charge from Eazipay of 1.50 a throw, is 4,500. The cost of accounts software changes, at one man-week, is 500 and the cost of sending letters to all customers is 500. The total cost is 6,000. That is backwards for the business, not forwards. We need to reflect on that.

Jeremy Browne: May I add another example to the very good one that the hon. Gentleman has just given? I visited Cotleigh brewery in my constituency, which is incurring considerable costs not only because of the VAT reduction, but because duty on beer is increasing to offset the VAT reduction. At the end of 2009, Cotleigh brewery will incur further costs in readjusting everything. The proposal is causing serious problems for businesses throughout the country.

Tim Boswell: I am grateful to the hon. Gentleman. It is entirely right that the House should consider all such evidence.
	I have quoted that example in my constituency, but I want to draw a slightly wider conclusion. Like most other businesses, that entrepreneur in my constituency uses Sage software. He has received a letter from his accountancy support office that says:
	You certainly aren't unique and we have had some customers dissatisfied with the fact we cannot update recurring invoices...the time scale we had to work with (7 days) to produce a utility meant that we were not able to accommodate all elements...for an automated...change. When we change back in January 2010 we will be able to plan better and create a utility that converts everything.
	That is about notice, but Mr. Overton is concerned about direct on-costs to his business. If the proposal is about the Government helping his business, God help us all if they turn the other way.
	I want to close on a few simple considerations. The Government's idea of watering the economy with a fiscal stimulus is misconceived and will have the consequences that my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) mentioned. I feel that it is the wrong approach. In a world in which the choices are difficult and the situation is direwe acknowledge those factsit would be better to concentrate on solutions that are specific to business and that are specifically about the availability of credit for those businesses.

John Randall: I begin by declaring an interest as a director of my family retail business, which has been in existence since my great-grandfather started it in 1888. The present times are more difficult than ever before, and I have to take the day-to-day decisions in the business, because, when life gets a bit difficult, those decisions end up being taken at the top.
	My heart sank when I saw the leaks during the weekend before the pre-Budget report was announced. I could not understand why on earth the Government were going to reduce VAT by 2.5 per cent. I actually thought that there must be more to it; I could not believe that they would be so crass as to reduce VAT by that amount. If they wanted to make an impact and give an impetus to consumer sales, they would have had to reduce it by considerably more, which would have involved huge expense and been completely unaffordable.
	I will tell the Minister what the effect of this measure has been on countless retailersevery retailerthroughout the country. When it was announced on the Monday, I immediately phoned the shop in Uxbridge and told my staff that we would implement the VAT reduction from the next day. That was effectively a week early, because no one would come into the shop otherwiseno one would buy anything that they believed was going to be cheaper the following week. We also had lots of orders that had been placed, and we had to make the decision to take a hit on those as well. Of course, the reduction is not 2.5 per cent. In real terms, it is 2.13 per cent. Consumers trying to do the mental arithmetic have soon realised that this makes hardly any difference to the price of most items.
	So, retailers have immediately had to take a hit. We have already heard about how they have had to put in the required software and change labelling. We decided not to do that, however, and we are still taking the appropriate amount off at the till. That is cheaper and more efficient, and I must admit that I am also making the political point to our customers, because they can then see how little they are actually getting. I have tried to be as neutral about this as possible, however. I might care about this place, but I care very much about the 30 people whom I employprobably more than about anything else with regard to that business. I have asked them whether anyone has come in and bought anything because it has been reduced by 2.13 per cent., and, of course, that is obviously not the case. Perhaps the Minister will tell me what personal purchases he has made, that he would not otherwise have made, because of the VAT reduction. If he is an honest manI know that he ishe will say that it has not made a blind bit of difference to him.
	So, this measure has been a disaster from the retailer's point of view. Consumers are already getting huge discounts, which are biting into margins. That is very likely to cause the demise of many retailers. A very sensible accountant of mine has told me, many a time, that turnover is vanity, and profit is sanity. It is all very well trying to reduce prices to get people to come in, but we have not had many people coming in.
	In relation to the compliance costs, why does the Minister think that it will be 5 million cheaper to re-price next year than this year? Is it because there are going to be fewer shops about? And why is familiarisation going to be so much cheaper? The hon. Member for Twickenham (Dr. Cable) made a point about the timing of all this. What is the worst time of year to put prices up? My hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) said that the provision would last until 1 December next year, and that there might be some change then. But who on earth is going to put their prices up at the busiest time of the year, or afterwards when the sales are on? Retailers are going to take a hit again at that time.
	What is the point of all this? I agree with my party and those on my Front Bench that this is not the time to be borrowing like mad, although I understand that others take a different view. I cannot go and borrow lots of money to help my business; first because I think it would be wrong and, secondly, because the banks would not let me. So why are the Government doing this? If I am being kind, I will say that it was something that they could do quickly, but actually I think that it was a gimmick and it sounded good. When he was Chancellor, the Prime Minister loved to finish his speeches with a gimmick, and he has obviously passed that on. Had the measure not been leaked, I think that the Opposition might have thought that it was a wonderful idea, for about five seconds until we worked out what it was really all about. It is a gimmick.
	I would not mind at all if the Minister were to say that he had changed his mind, and that he was going to put the VAT rate back to 17.5 per cent. and leave it there. I would even make a pledge to the consumers of Uxbridge that I would keep my prices at the 15 per cent. level because the current VAT change will not help them at all. I urge the Minister to look at this. When those at the Treasury make changes, do they ever ask real retailers and real people what they want, or do they sit down and come up with these incredibly ridiculous schemes? I was delighted to see that the Treasury did not bother working out the impacts on all the groups listedand I am not going to go through them, as I would be attacked for being politically incorrect.
	To be honest, the whole VAT change is a gimmick that will not help, but will actually have a worse effect on retailers and poor employers. As the right hon. Member for Birkenhead (Mr. Field) said, after Christmas lots of people will be in big trouble. People will ask, What did the Government do? and the answer will be that they took prices down by 2.13 per cent. when they were already reduced. I have to say that that is a disaster.

Stewart Hosie: Let me say from the outset that I support fiscal stimulus, as it has been clear for some time that the problems of recession and deflation were far more likely than problems stemming from inflation. That is quite clear now, and my view is that monetary policy alone will not be sufficient to deal with the situation. It remains to be seen whether this particular package is the right one and whether it will be sufficient to bring about a stimulus effect, but it is what we have at the moment, so we will need to go with itat least for the time being.
	Although I support the present fiscal stimulus and welcome much of what the Government announced in the pre-Budget report, I find it gallingindeed, extremely gallingthat it is portrayed by the Government as their somehow saving the world or leading the leaders of other nations and states around the world. I say that not least because the PBR post-dated the US fiscal stimulus package of $150 billion in February, the Spanish package of $18 billion in April, the October announcement by President Sarkozy of 100,000 subsidised work contracts, the 50 billion package announced in Germany and, indeed, the Japanese package of 235 billion, if my memory serves me correctly, of which 20 billionalmost as much as the total UK packagewas directed at householders with mortgages. Let us have no more of this Government pretending that they have been decisive when they have not, or that they are leading, which they most certainly are not.
	If the package had been announced in a full Budget, we would have had four days of debate and a Finance Bill subject to detailed scrutiny in Committee. Alternatives for how to spend 1 per cent. of gross domestic productabout 12.5 billionwould have been varied and very clearly put. I am sure that they would have ranged from cuts in corporation tax to allow businesses that really create jobs to keep more of the money they earn in order to sustain themselves through recession to more direct public investment and everything in between. I am sure that each and every one of those alternatives would have had some merit in its own right and would have been worthy of consideration. We are, however, where we are. We are talking about 1 per cent. of GDP; it is 12.5 billion and it is the largest part of the reflationary package. The bulk of the rest was 5 billion of re-profiled money for direct public investment; it was not new money and it will, of course, lead to a funding shortfall in public expenditure in two or three years' time.
	My criticism of the VAT proposal was that the Government were not straight with people about it. Had it been played solely as a business measureif businesses could have kept the 2.5 per cent. extra to sustain them through the recession in order to maintain, protect and preserve as many jobs as possiblethere would have been some merit and honesty in it. The idea of selling it on the basis that 2.5 per cent. was coming off the price of goods and going into consumers' pockets was simply wrong, not least because of the heavy discounting of 20, 30 or 40 per cent. already taking place. When I bought a present for my daughter in Dundee on Sunday, there was a 70 per cent. discount on it already, so the VAT cut is simply swamped. As I said, had this been played as providing 2.5 per cent. extra to businesses, instead of the pretence that it was going to consumers, we would have been happier with it.
	Let me now deal directly with the prayer, and with comments made by the Liberal Democrats and others. In some cases, the cost to businesses that have changed their rate has been enormous. I am told that the average cost to the smallest businesses is about 2,500. I fear that, if the prayer were successful, they would be required to pay a further 2,500, as VAT levels would have changed twice in the space of a few months. Small businesses would be burdened with a bill not for 2,500 but for 5,000and, in the case cited by the hon. Member for Daventry (Mr. Boswell), a bill not for 6,000 but for 12,000. That would be horrendous.

Frank Field: Is it not true that most firms are now cutting prices, and therefore have not had to make adjustments to take account of the VAT changes?

Stewart Hosie: The VAT changes will need to be accommodated. Some companies will change their marketing collateral, while others will invoke training procedures so that adjustments can be made at the till. Othersalmost allwill have to spend additional money on accountancy to accommodate the way in which the books will be audited. There may not be a real, recognisable cost in terms of, for instance, the production of new brochures, but there will be a cost none the less.
	The next issue that I wish to raise was alluded to by the hon. Member for Twickenham (Dr. Cable). When VAT was reduced, the Government compensated for that outrageously with a second increase in duty on Scotch in a single year, and by increasing the duty on fuel. The prayer calls only for the VAT change to be annulled, with no annulment of the increases in duty that were introduced to offset the VAT reduction. That would land the drinks sector, the hospitality sector and those who depend on fuel with an additional charge.
	Although I support fiscal stimulus, and although I have criticisms of the way in which the Government have introduced the VAT reduction, it amounts to 1 per cent. of GDP and 12.5 billion of real money for the real economy. I must therefore tell the Liberal Democrats, with regret, that the Scottish National party will not be able to support their attempts today.

Adam Afriyie: There are three words for this VAT reduction: foolish, foolish, foolish. It is foolish in its conception, it is foolish in the way it has been implemented in the House as well as across the economy, and it is foolish because it will not achieve the outcome for which the Government hope. I do not question the Government's motive; I simply question the method by which they are attempting to deliver their aim.
	The right hon. Member for Birkenhead (Mr. Field) used the word effective, suggesting that there were probably more effective ways in which 12.5 billion, an enormous sum, could be put into the economy, or put into monetary stimulus, that would actually make a difference. I share that view, but I would put it slightly more strongly. I would say that reducing VAT is categorically the wrong thing to do at this time.
	Let me deal with the first count of foolishness in conception. I think that the reduction was conceived prematurely. The problem that we have is the lack of liquidity. Can people borrow money? Can people renew their mortgages? The answer is no, not at the base rate that has been set. Can businesses continue with their existing overdrafts and loans? The answer is no, certainly not at the current interest rate, and many facilities have been withdrawn. Can people purchase cars? We have seen a 37 per cent. decline in the number of cars purchased in the last quarter. People cannot purchase cars because there is not enough liquidity. There is not enough cash in the system, so the finance houses will not finance new vehicles. That is the problem, and sadly the solution provided by the Government is an incorrect one. They are providing a fiscal stimulus when what is required is more cash flowing through the banking system. It is the Government's banking solution that has not worked.
	I believe that the VAT reduction was also born out of panic. It is clear that a massive economic failure is taking place. We can argue about whether it is a world downturn, and of course we acknowledge that it has international aspects; but we are clearly in a worse position than most developed countries to respond to the situation. I believe that the Government were under pressure to do something, and simply grasped at a measure that they hoped to be able to implement quickly. They grasped at the wrong measure, and I suspect that they are beginning to realise that that was a mistake.

Hugo Swire: I think my hon. Friend is giving the Government too much credit. Does he not agree that this is a very cynical move, knowing, as we now do, that they fully intend not only to raise VAT to the former level but to increase it in the next financial cycle?

Adam Afriyie: I was trying to find a ray of lightof hopeor a good motive behind this move, but I fear I was being a little too kind, and I acknowledge my hon. Friend's intervention.
	The problem at present is not a demand problem; it is a banking, liquidity and monetary problem. This is worse than crass Keynesianism; it is like burning paper money to try to keep warm when what we need to do is fix the heating system. We need the hot water pumping around the heating system, but that is not what is happening.
	Secondly, this is a foolish measure in its implementation. I am not one to talk often about parliamentary privilege and parliamentary debate, and to say how important it is that we all get to debate such matters; I am more interested in the outcome. On this occasion, however, the measure has been rushed through the House, and I think that if we had had the time to debate it, a different decision would have been made. As the right hon. Member for Birkenhead said, there are other things we could do with 12.5 billion; on cool, calm reflection, I think that even Government Members would have reflected sensibly and realised that better things could have been done.

Rob Marris: Does the hon. Gentleman share my constitutional reservations about cutting taxesand putting up taxes in terms of excise duty on alcohol and fuelwithout the measures first being agreed by Parliament?

Adam Afriyie: I acknowledge that point, but I do not want to get too much into parliamentary process because I am not sure that that is helpful at this moment. Certainly, my general understanding is that there is a Budget that is debatable, especially in tax matters which are changed once a year. There is clearly a loophole or exception for VAT, but I share that concern.

Graham Stuart: I do not quite agree with my hon. Friend on that. The point made by the hon. Member for Wolverhampton, South-West (Rob Marris) is right: the only protection for our constituents against an over-mighty Executive and their taking decisions on the hop is that those decisions, particularly when they pertain to tax, have to come before this House so that Members, who have to go back to their constituents and hope to be re-elected, can scrutinise those decisions before they are made. The hon. Gentleman is right to say this is a serious issue.

Adam Afriyie: That is a well-made point. I was merely observing that there is an exception for VAT, which is why we have the VAT cut on the table today rather than a more measured approach involving our examining more sensible measures in the Budget in the round, as we normally would.
	The other reason why this was a foolish implementation that was too aggressive and hasty is simply the amount of notice given to businesses. I declare an interest in that I am a non-executive director of two or three businesses, and it is clear that the stress and cost involved in adjusting accounting procedures and adapting to the way businesses will behave in the short term are onerous. The estimated sumI cannot remember whose estimate it isfor complying with this VAT change was about 300 million, with possibly a further 300 million next year. That is about 7 or 8 per cent. of the hoped-for benefit from this measure.
	Finally, this is a foolish measure because it will not achieve the outcome the Government seek. I ascribe good motives to them: the Government want to boost expenditure in the economy so that growth begins again, but this will not do that.

Graham Stuart: I am extremely grateful to my hon. Friend for giving way again; he has been most generous. I wonder whether he agrees with the following point, which I do not think has been raised in the debate so far. Because of the financial incontinence of the Government, such has been the loss of confidence in sterling that even if people are going into the shops to buy imported goods at the supposed 2.5 per cent. reduction, that sum has been far eclipsed by the loss of strength of the pound. That is impacting directly on our constituents' ability to buy such goods to take home for their families.

Adam Afriyie: That is another well-made point. I was glad to give way, because I know that my hon. Friend will not have time to make a speech.
	This move is foolish because it will not achieve the desired outcome; it does not help the least well-off as much as it helps the wealthy; the duties on spirits and on fuel charges are not reclaimable, so the effect is a net oneif not an increase in taxfor the groups of people involved; and prices are already falling so a 2.1 per cent. reduction will make no difference. I simply say that there are better things to do with 12.5 billion. We need to get the money pumping round the system. Our idea, which I hope the Government will adopt, of a loan guarantee schemea credit guarantee schemewill make a huge difference in pumping that money round the system so that people begin to get mortgages, begin to feel confident and begin to spend money again.

Stephen Timms: Over the past year, major shocks have hit the economies of every country in the world, and the economic and fiscal climate is exceptionally challenging, but the macro-economic framework that we put in place in 1997 means that we face these shocks from a strong foundation. Our priority is to support the economyto support families and businessesthrough these difficult times. We are navigating a path to get Britain through this in the best possible shape, and to do it in a way that is fair to everyone. Therefore, in the pre-Budget report, my right hon. Friend the Chancellor set out measures to help businesses and home owners, and to boost people's incomes now.
	We are acting by putting money into the economy now so that we come out of this situation sooner and stronger. We have set out how, once the economy is growing again, we will deal with the public finance problems caused by the credit crunch in a way that, again, is fair to everybody. We are acting now, unlike the Opposition, who would turn their backs on families and businesses at just the time they need support most. We are acting, because if we do not act now it will cost moreit will cost more to the economy, more to the public finances and more to society.

Philip Hammond: Would the Minister tell the House about the 18.5 per cent .VAT proposal, because his signature was on the document that was published? The Chancellor said that many proposals were considered, so can the Minister tell us whether regulatory impact assessments were prepared for all sorts of other VAT level proposals? Was his signature appended to them all?

Stephen Timms: I am delighted that the hon. Gentleman has given me the opportunity to set the record straight on the Floor of the House. The Chancellor has made it clear repeatedly that he considered, as any Chancellor would, a large number of options about every aspect of tax and spending, as the House would expect. I ask the hon. Gentleman to look at the incorrect impact assessment that appeared on the website, because if he were to do so, he would see that I had not, in fact, signed that document. The Leader of the Opposition said that I had signed it, but my name had been typed in a sort of italic, slightly floral typeface under the following phrase:
	Signed by the responsible Minister .
	I cannot see how anyone could have mistaken that for my signature, and I am pleased to have had the chance to put that on the record.
	My right hon. Friend the Member for Birkenhead (Mr. Field) rightly drew attention to today's unemployment figures, because they underline just how vital these measures are and how vital a stimulus now is. If the Conservatives, when in government, had introduced a fiscal stimulus of similar scale at the same point in the previous economic downturn, it would have saved some 300,000 jobsbut they did not. They did nothing; they let the recession run its course, as some of them are arguing should happen again now. The nation remembers the enduring damage that was the result: businesses needlessly destroyed, jobs unnecessarily lost and people remaining workless today as a direct consequence of the failings then.

Graham Stuart: Will the Minister answer the point made by the hon. Member for Wolverhampton, South-West (Rob Marris) about why the House did not debate a proposal of such importance before it was implemented?

Stephen Timms: Parliament has decided, in primary legislation, that a reduction to the VAT rate can be made before debate in Parliament, and that is what we have done.
	Our actions will be different from those of the Opposition when in government. We will bring forward 3 billion of capital investment from 2010-11 to this year and next to increase capacity in the rail network, with new carriages, and in the motorway network; to improve social housing and build new homes; to renew primary and secondary schools; and to increase energy efficiency. It will put people to work, it will renovate infrastructure and it will support jobs in key industries. It will also help to put money into the economy in the coming months.
	However, to prevent the recession from deepening, we need to do more to put money into the economy immediately. There is a widespread international consensus that a fiscal stimulus to help the economy is the right thing to do. It is backed by parties of both left and right on every continent, by the major countries of the world, by the international institutions such as the IMFwhose chief executive has been very forthright on the subjectby the business groups such as the CBI and the Institute of Directors, the Bank of England and many more.

Kelvin Hopkins: I agree with the idea of a fiscal stimulus, although I would go further and make it bigger. I am puzzled, however, by why the Government have chosen to put money into reducing VAT. That 12.5 billion could have been put directly into the pockets of state pensioners and of families with children, and directly into infrastructure investment that would create jobs now. Would not that have been a much more efficient way to counter the recession?

Stephen Timms: We have done every one of the things that my hon. Friend has just listed, including, for example, the 60 payment to pensioners in the new year. We considered a wide range of options for the character of the stimulus. We wanted a measure that would help everyone, including millions of households that pay no direct tax at all. I point out to the hon. Member for Twickenham (Dr. Cable) that changing income tax would not help at all, because some people, such as pensioners, do not pay it. We wanted a much needed extra injection of spending into the economy right now. An effective stimulus needs also to be temporary.
	This statutory instrument provides the much-needed stimulus by reducing the standard rate of VAT for just over a year with effect from 1 December. This temporary reduction is equivalent to the Government giving back some 12.5 billion to consumers to boost the economy. The Treasury forecast of the impact makes the cautious assumption that around half of the extra money will be put back into the economy while the rest is saved or spent on other goods.
	As my hon. Friend asks, why did we choose VAT rather than other taxes? As we intended, we have already seen retailers pass on the reduction in the lead up to Christmas. I am delighted to hear that Randalls in Uxbridge implemented the reduction the following day, and others did so just ahead of its introduction, with cheaper goods and services. It is too early of course to make an assessment of the impact, but I did notice that the director of selling operations for John Lewis spoke of
	a clear increase in big ticket purchases since the VAT reduction.
	By encouraging spending, this temporary rate change will certainly help stimulate growth.

Michael Fabricant: As the Minister will be aware, the managing director of John Lewis, Andy Street, has said that the 2.5 per cent. discount simply meant a delay in high street purchases that was made up the following week. If the Minister had continued the quote from the selling director, it was clear that he was making the same point.

Stephen Timms: But the key point is that a typical family spends 900 per month on VATable goods, and for them, if the reduction is fully passed on, the tax cut means that their spending last month would leave them an additional 20 at the end of this month, and every month to the end of this year, oras my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt) saidalmost 300 in total. That is a fair way to deliver the stimulus because lower income households spend a larger share of their income on VAT than higher income households. It is particularly helpful for families on a tight budget and it will provide the vital stimulus that we need.

Rob Marris: I shall join the Government in the Lobby tonight, but I am concerned about the increase in excise duty on alcohol, which will adversely affect Marston's brewery in my constituency. I am also concerned about the constitutional propriety of putting up taxes such as excise duty without this House's voting on them first. What is the constitutional legal position on that?

Stephen Timms: Parliament has decided that it should be permissible to do exactly what we have done. The decision was made by Parliament.

Nigel Dodds: Will the Minister confirm that if the motion were to be supported that would effectively impose a tax increase on consumers and households across the country?

Stephen Timms: The hon. Gentleman is absolutely right, of course. I think that that would be a very unwelcome move.

John Randall: Will the Financial Secretary give way?

Stephen Timms: Since I have mentioned the hon. Gentleman's shop, I shall give way to him.

John Randall: Would the Minister advise my constituents who are particularly worried about their jobs, as well as the constituents of every other right hon. and hon. Member, to spend more or to save?

Stephen Timms: That is a matter for every household to decide. It depends on the situation in which the household finds itself. I am certain that a very large number of people will choose to spend the 20 extra that they will have, on average, at the end of the month, but others will choose to save it and to rebuild their household finances. Of course, it is perfectly appropriate for them to do so.
	I want to respond to some of the points that we have heard in the debate. Unsurprisingly, we have heard some comments about Germany, which the hon. Member for Runnymede and Weybridge (Mr. Hammond) mentioned. The key is to look at what the German Government are actually doing. Germany has borrowings that are significantly greater than those of the UK. On 5 November, Germany announced a 32 billion fiscal stimulusa larger stimulus, proportionately, than that in the UK. I refer the hon. Gentleman and others to what the German Chancellor said last week:
	We support the view of the
	European
	Commission that we need to provide 1.5 per cent. of GDP for the stimulus package to strengthen the economy.
	On Monday, the German Economy Minister said that Germany had an obligation to introduce new measures to stimulate its economy. He wants Germany to introduce tax measures totalling 25 billion next year. The chief economist of DekaBank, Ulrich Kater, made the point that reducing VAT would have been more efficient than the methods that have been adopted. In Germany, the key is to look beyond some of the words to see the decisions that are being made.
	This move is the right stimulus for families, for businesses and for the UK economy and I commend the order to the House.

Vincent Cable: I thank the Minister for giving me 100 seconds to respond to a long and complex debate. I shall not say a great deal about his contribution. He got off to a good start by reminding us about the 1997 fiscal framework and suggested to me that chutzpah is a necessary qualification for being a Treasury Minister, which he has now done twice.
	There were two major contributions to the debate, and I just want to respond to the right hon. Member for Birkenhead (Mr. Field) and the Conservative spokesman, who brought up two major issues. First, of course this is all overshadowed by the banking system and the lack of credit, and that is what we have to focus on. I have spoken about that volubly and at length, so I totally agree with that. The subject of what exactly we should do is more controversial. The Conservative proposal for guaranteed credit may have an important role, but, as I pointed out on Monday, if it is to work it effectively means the nationalisation of credit. That, of course, would have major public finance implications that I do not think they have yet thought through.
	The other major issue is whether we believe that any fiscal stimulus is necessary. I am perfectly willing to entertain the dangerous idea that the hon. Member for Runnymede and Weybridge (Mr. Hammond) and the right hon. Member for Birkenhead may be right and that such a stimulus may not work. If that is so, however, they should be in Washington, not lecturing us here.
	What is being proposed is just the faintest echo of what is happening throughout the western world, and especially in the US. The American Congress and the new US Administration are preparing a stimulus that is about 30 times as big as the British stimulus, in a context of even weaker public finances than ours. If it does not work, the consequences for the western economies will be catastrophic. As I said
	 One and a half hours having elapsed since the commencement of proceedings on the motion, the Deputy Speaker put the Question (Standing Order No. 16(1)).

The House divided: Ayes 223, Noes 303.

Question accordingly negatived.

Anthony Steen: On a point of order, Mr. Deputy Speaker. We need your advice and guidance. Today I received an e-mail from a moleor perhaps I should say a krot, which is Russian for molefrom the UK Border Agency saying that the Government were going to ratify the Council of Europe convention on action against trafficking in human beings. As chairman of the all-party group on the trafficking of women and children, I have not been notified of that. Opposition Members do not know anything about it, and there has been no announcement from the Government.
	Is there any point in having a Chamber of the House of Commons if the Home Office forget, or ignore, the fact that there is a House of Commons and there are Members of Parliament, and that we need to know whether ratification is going ahead before the media, other organisations and every Tom, Dick and Harry? It is a terrible abuse of the House that the Home Secretary chooses to announce that this is going aheadif that is the caseand one hears it from a mole in the UK Border Agency. I should advise you, Mr. Deputy Speaker, that I have left my door unlocked, if the police want to see anything further.

Mr. Deputy Speaker: I have no knowledge of the matter that the hon. Gentleman brings before the House. He will be aware that Mr. Speaker is always most insistent that important matters for the House should be brought to the House. The point that he has made is on the record and the Treasury Front Bench will have heard what he has said.

Parliamentary Pensions

Motion made and Question proposed,
	That this House endorses a cost-neutral package of changes to the Parliamentary pension scheme consisting of
	(1) the introduction of a new option for members of the scheme to pay a member contribution rate of 5.5 per cent. of salary for a pension building up at an accrual rate of 1/60th of final salary for each year of service, as an alternative to the existing accrual rate options; and
	(2) changes to the ill-health retirement provisions, as proposed by the Trustees, including two different levels of benefit depending on the degree of a scheme member's incapacity, and the periodic review of ill-health pensions. (Ms Diana R. Johnson.)

John Butterfill: I will be relatively brief. These two changes to the rules of our parliamentary contributory pension scheme go some way towards righting the wrongs that have occurred in the past, will be beneficially applied for Members overall, and will in some cases help to prevent what may have been abuse in the past.
	The first change relates to retained benefits. As you will be aware, Mr. Deputy Speaker, retained benefits are the restrictions that apply to members of our scheme who have been members of another scheme, particularly a better paid one than a parliamentary scheme. Members who have retained benefits will often reach the ceiling of the amount that they can earn through our scheme well before they are due to retire.
	The Government recognised that that was unnecessary in modern conditions in the Finance Act 2004, which took away the compulsion for scheme sponsors to operate a retained benefit scheme. The problem is that if scheme sponsorsincluding ours, the Treasurywere to accept that, there would be a considerable increase in their costs. The Government, in line with many private sector scheme sponsors, have said that that would not be an acceptable increase to the burden on the scheme.  [Interruption.] It would help me enormously if hon. Gentlemen would not have a conference in the Chamber while I am speaking. They could perhaps have it elsewhere, or be a bit quieter. It is quite difficult to put across a fairly complex point that is not always terribly well understood in the House.
	What is proposed in the motion, which has been accepted by the Government, is an arrangement whereby those who are affected by retained benefits can remain members of the scheme, and may continue to contribute, in a way that is much fairer. At the moment, quite a number of Members are contributing at a level that means that they will not see the benefit of the money that they are putting in; they are spending their money for nothing. That is clearly an unacceptable situation.

Simon Hughes: I have a simple question for the hon. Gentleman. He said that the proposal, which I accept and support, has been accepted by the Government. Surely the reality is that it is not a Government matter, but a House matter? The Government's view is of course of interest, but in the end it should not persuade anybody either way, should it?

John Butterfill: I am grateful for that intervention, but of course the reality is that if the House were to put forward a motion that imposed an increased burden on the scheme sponsor, which is the Government, the Government would be perfectly entitled to move a motion against it, and then we would not have the money to implement the measures. We therefore have to move by consent on these matters. In present circumstances, it would not be appropriate for the Government to accept an amendment that would increase substantially the cost to the taxpayers; they are bearing rather a lot at the moment, and it would look rather greedy if we were to try to insist on such an increase. We are trying to find a mechanism that does not impose a huge additional burden on the Government, but that nevertheless rights a serious wrong affecting Members of the House, particularly those who saved significantly for pensions before they became Members.
	The proposal will allow Members who are affected by retained benefits to change the basis of their membership of the scheme; they may go on to a new level, and contribute towards a sixtieths scheme. The present two alternatives are a fortieths or a fiftieths scheme. The sixtieths scheme will not be as beneficial, because in any given year they will not accrue as much money as they would at fortieths or fiftieths. However, it will mean that they can continue to remain members and contribute to the scheme, because at sixtieths, retained benefits do not apply under present law. They can contribute at one sixtieth without limit.
	That means that those Members would not be expected to pay as much for their special scheme as those who are on a one fortieth scheme, who currently pay 10 per cent., or those who are on a one fiftieth scheme, who pay 6 per cent. It is proposed in the motion that they should pay at 5.5 per cent. rather than 6 per cent. of their salaries, and they can do that without prejudicing their rights under the retained benefits regime and without prejudicing their right to remain in the scheme for as long as they remain in the House.
	If Members came out of the scheme because of the problem with retained benefits, it would mean that they would no longer have the benefit of a death in service grant to their partner or spouse. That, again, is pretty unfair on Members. The proposal gets over those problems. It does not totally solve them, but it creates no cost to the scheme sponsor. Those who are at present trapped in an extremely unattractive situation can escape from that.
	Members will have to make a selection. All those coming in new at the next general election will have to decide whether they want to be on the one sixtieth scheme, the one fiftieth scheme or the one fortieth scheme, and they will contribute appropriately. Following the making of the order, it will be possible for those who are at present on the one fiftieth or the one fortieth scheme to come out of that and to move to the new scheme.
	The Government's proposal is that that should be a once-and-for-all decision. I am not sure whether that is necessary, and I hope they may think again about that. Members' circumstances change over time. People are often in the House for many years and they may wish to change from one scheme to another. Wethe trusteeshave asked the Government Actuary whether there would be any significant cost if Members could make the selection after every general election. The Government Actuary says that the cost would be insignificant.
	We have also consulted the staff of the House in the pensions unit as to whether that would involve any significant cost or problem for them, and they confirmed to me that it would not. I am therefore not sure why we cannot allow Members to make the selection after every general election. Be that as it may, I strongly recommend that right hon. and hon. Members approve the motion today, because it is very much for the benefit of Members as a whole and will right a fairly severe injustice which has applied up to now.
	The second part of the motion relates to ill-health retirement. The trustees have found that the present scheme is too inflexible. Somebody who becomes very seriously ill or disabled and is no longer able to carry on serving as a Member of Parliament or, probably, to take up any particularly remunerative employment must prove that to us as trustees, and must get a doctor and sometimes a specialist to confirm that that is the case. We, the trustees, have a consultant medical practitioner who would assess that on an independent basis and advise the trustees.
	These are difficult decisions to make, because there is often quite a fine line between not being able to do things and being able to do them, but with some difficulty. We have Members in the House who are blind, who are in wheelchairs, who have all sorts of afflictions, yet manage to carry on a very successful parliamentary career. Therefore, no one of those conditions would be enough. The condition has to be permanent, ongoing and unlikely ever to get any better before we decide that we will grant that early retirement. It is a generous scheme, similar to most others outside the House, but it means that even quite a young Member could retire on ill-health grounds and be paid the full pension that he or she would have received if they had stayed here until they were 65.

David Winnick: Can the hon. Gentleman give any indication of the number of Members who have appliedin the past 10 years, sayto be compensated under the provision that he has just described?

John Butterfill: The past 10 years is about the whole time in which I have been a trustee. I would have thought that the number was about 30 or 35something of that order. Not all such applications have been approved, but some have.
	The difficulty is that medical situations are often a moving target. There have been radical improvements in medical science, so conditions that were impossible to treat a few years ago can now respond very well to treatment. Furthermore, we do not know what the position will be in another five or 10 years. We have to make a decision based on a snapshot in time.
	The situation means that, when we are not happy with the position of a Member, we have to turn them down, even though they might have quite concerning conditions. Again, we are not particularly happy with that. We now propose a two-tier ill-health retirement scheme, which is common outside this place in the private sector. At the moment, there is nothing that we can do to assist somebody who is suffering considerably but not so badly that they cannot do anything, or somebody who has a condition that our medical advisers tell us could be overcome with treatment, after which they could carry on working. We are therefore proposing a two-tier arrangement.
	One of the tiers is clear: if we are absolutely satisfied about the degree of a Member's disability and all our and their medical advisers agree, then we will give that Member their full lifetime pension, starting immediately. If Members have a disability of a lower ordernot so severe as to qualify them for the full lifetime pensionthe new scheme will say that they can retire and take their pension straight away without penalty, but they will get as pension only what their contributions to date will earn. So there is an advantage to them, because they will get the money earlier without any penalty, but the quantum will be only what can be bought with what they and the scheme sponsor have paid in to date. We think that idea much fairer; it enables those who are ill but who do not fully qualify to retire on a reasonable pension and get it early, and it does not prevent those who are much more severely affected from a health point of view from retiring immediately with a full pension.
	The only other part of the proposal is that we would reserve the right to review people's conditions, either up or down. If we find that somebody to whom we have given a full pension has suddenly fully recovered, is capable of doing absolutely everything and is earning a fortune doing some other job, we might say, Well, hang onperhaps the state is being a bit too generous here. The recoveries that some people make can be remarkable, as we have seen in all sorts of instances. The proposal enables us to move people up or down the scale if the appropriate evidence is available. We believe that to be the right way to proceed, and I recommend the motion to the House.

Simon Hughes: Both of the proposals seem eminently sensible. I am grateful to the chairman and his colleagues, the trustees, for considering these important matters. These things need careful deliberation, as they would for anyone else planning for their retirement. My intervention was not to suggest that if extra money were asked for from the Treasury, there was not a Government interest. My understanding of the package is that it would reduce the Treasury's liability, but perhaps the Deputy Leader of the House could confirm that in a second.
	I have two brief points, one of which relates to the first motion, which seems eminently sensible because it gives greater flexibility. That is something we would wish for others outside this place, so we are not asking for anything special. That flexibility means we can take less, or more, from our salary. We will have three choices as to how much is deducted and three choices on the length of time over which we can contribute. The proposal and that flexibility are both eminently sensible. I support what the hon. Member for Bournemouth, West (Sir John Butterfill) said because people should be able to vary the arrangement at the beginning of each Parliament. That seems an appropriate response for the reasons that he gave: people's circumstances change and they might want to contribute more quickly to reach the maximum of the pension.
	I apologise if the hon. Gentleman said this, but I want to repeat it because I think it is important. I understand that we are one of the only groups of people who are limited to a pension with a two-thirds maximum in relation to our finishing salary. That does not apply across the work force in general, but because we are governed by a special arrangement in statute, we are kept to it. The public need to know that.

John Butterfill: That is not totally correct. If Members reach the maximum level before they are 65, they can no longer continue contributing until they are 65. Once they are 65, they can resume contributions.

Simon Hughes: I have not quite addressed post-65 circumstances yet, but I understand the hon. Gentleman's point. People who retire at the conventional retirement age would be able to contribute to a pension that would only be up to two thirds of their final salary, but he says that if people continue working beyond that, they could pick that process up again.
	My second point is that the hon. Gentleman made the extremely good point that there must be a system that allows flexibility about the amount of money people are given if they retire on ill-health grounds, which does not treat everyone as if they were the same, because obviously they are not the same. One given lump sum or settlement would be clearly inappropriate in the different circumstances that may exist. As the hon. Gentleman mentioned, we need the flexibility to conduct a review if a person's health gets much worse, or if they miraculously get much better, either by virtue of science of by some other means. The public would not expect anything else.
	I hope that the House will support these eminently sensible proposals.

Shailesh Vara: Earlier this year, the House debated the report of the Review Body on Senior Salaries regarding parliamentary pay, pensions and allowances. I am sure that many Members will remember that debate, although most of the speeches and comments related to the more newsworthy items of pay and allowances, rather than parliamentary pensions.
	Despite that, one of the motions passed at the end of the debate was a recommendation from the reportnamely, that members of the pensions fund with retained benefits should be allowed to opt for a one-sixtieth accrual rate, in return for paying reduced contributions, provided that off-setting savings could be found to make the change cost neutral. Ensuring that any change is cost neutral is important and I am pleased to see that the Government Actuary's Department feels that the proposals achieve that.
	The changes suggested to the pension scheme are right and proper. It is only fair that those who have retained benefits and will therefore receive less compared with other Members, should contribute less and at a different accrual rate. I appreciate that there has been some debate as regards the percentages involved, but the proposals before us provide a sensible halfway measure, ensuring that those who receive less actually pay less, while ensuring that those who do not have retained benefits do not end up picking up the slack.
	The ill-health retirement pensions provisions are very much a step in the right direction. We must recognise the concern about the existing structure, whereby the ill-health pension for serving Members does not distinguish as to whether he or she is deemed capable of being able to carry out some other form of employment. Moreover, once a medical assessment has been made, the current procedure does not allow for reviews to determine whether it is appropriate to continue with the payments.
	I therefore welcome today's proposals, which create a two-tier level for serving MPs, which is a structure that is common in the private sector, as well as in other public service schemes. There will be a higher level of payment for those scheme members whom the trustees feel are permanently incapable of doing any form of work and a lower level of payment where it is felt that, although the member is deemed permanently incapable of performing the duties of an MP, he or she can none the less do some other types of work. It is also right that once an assessment has been made, the case and medical history should be subject to review, as felt necessary by the trustees.
	The proposals before us are sensible and balanced. They point towards a better and fairer system, and we on the Conservative Benches support them. Finally, may I put on record our huge thanks to my hon. Friend the Member for Bournemouth, West (Sir John Butterfill) and his fellow trustees? They have been trying to resolve the issues for quite a while, and during that period they have put in much time and effort. I thank them not only for sorting out the issues to hand but, more generally, for all the work that they do on our behalf. It is much appreciated.

Chris Bryant: I, too, pay enormous tribute to the hon. Member for Bournemouth, West (Sir John Butterfill). I am not sure whether the job of looking after pensioners in Parliament automatically goes to a Member of Parliament who represents Bournemouth, because of the concerns of constituents there, but I am sure that the hon. Gentleman has plenty of experience of dealing with his constituents' pension issues down in Bournemouth. I am also grateful to him because, as a long-established member of the all-party Spain group, I know that he knows the difference between a good bottle of Rioja and a not-so-good bottle of Rioja.
	We should also pay tribute to the other trustees and the staff who administer the scheme. Every hon. Member, from across the House, would agree that they receive a personal service from the staff who operate the scheme. Those staff sometimes have to explain matters to hon. Members whose main interest in life has not necessarily been their pension arrangements and whose first level of expertise is not in pensions.
	The Government, too, agree that the proposals before us make sense. Those proposals have come from the trustees and are the result of considerable consideration by them over the past couple of years, and they were broadly outlined in principle in the debate on 24 January this year. The new accrual rate in particular makes sense. It is unfair for those who have significant retained benefits not to gain any further benefit, despite the fact that some of them pay in at 6 per cent. or, in a few cases, at 10 per cent.
	That applies not just to one part of the House, but to hon. Members from all parts of the House. I am therefore grateful that instead of the current system, whereby, as has been said, either 6 per cent. of salary is paid for an accrual rate of one fiftieth or 10 per cent. is paid for a rate of one fortieth, we will introduce a new scheme, whereby 5.5 per cent. will be paid in for an accrual rate of one sixtieth. That is simply fair.

Simon Hughes: I want to allow the hon. Gentleman to correct what I said or at least to put the Government's position. My proposition earlier was that the new scheme would be less expensive to the TreasuryI think that I was correct in saying that it would effectively be cost-neutralbut can the Minister confirm that as he understands it the scheme will certainly not cost the public any more and that the objective of the whole package is to be cost-neutral at most?

Chris Bryant: I was coming to that. The Government reckon that the new accrual rate will cost something in the region of 0.4 per cent. of future service payments in the scheme, but similarly, the benefit of the changes to the provisions relating to retirement through ill health will be something in the region of 0.4 per cent., so the two elements will balance each other out. That is why we are glad to say that what is being put forward this afternoon is entirely cost-neutral.
	As for retirement through ill health, the hon. Member for Bournemouth, West pointed out the concerns that many have raised. First, at the moment, everyone is treated equally in the decisions that the trustees have to make, despite the fact that there may be considerable differences between somebody who is clearly permanently incapable of undertaking any future paid employment and someone who thinks that they may be able to do some work, but not the arduous work of a Member of Parliament. Furthermore, there is a concern that there is no system of review at the moment. As has been pointed out, this is not so much a question of sudden miracles occurring in people's medical conditions as of the fact that their conditions might go through different phases or cycles, during which it might be possible for them to return to work. As we know, returning to work is one of the best forms of cure for many people. We are aware that it is important for there to be a system of review.

David Winnick: I apologise if my hon. Friend has already covered this point. I do not wish to be accused of hypocrisy, as I will obviously be a beneficiary of the pension scheme. Does he accept that, while it is important for there to be such a pension scheme, questions are bound to be asked about the difference between our scheme and those of the millions of ordinary people who are now being forced out of final salary schemes? There is speculation, to say the least, in the present circumstances about what sort of pension most of our constituents will receive when they reach retirement age.

Chris Bryant: I very much hope that my hon. Friend will not be retiring for some considerable time. I also hope that he will not have to retire for reasons of ill health; he seems to be a gentleman of exceedingly good health. He has made the important point that many of our constituents look at our parliamentary contributory pension scheme while having concerns about their own pension arrangements. That is why the Government have been keen to ensure that these proposals, in their unity, will not cost the taxpayer a single penny more, and that the package that we are introducing today will be cost-neutral. That point could not be more tellingly made than in the present global economic circumstances, but it also behoves us to look carefully at the way in which we look after ourselves. That is why it is right that there should be a tightening of the provisions for retirement through ill health, as the trustees have proposed.

Don Touhig: My hon. Friend the Member for Walsall, North (Mr. Winnick) was quite right to point out that some of our constituents are having difficulties with their pensions, but the House should be aware that, of about 770 Members who left the Commons in the past 10 years, only 34 qualified for the full pension.

Chris Bryant: My right hon. Friend makes a good point. It is also true that many former Members of Parliament have to rely on the charitable funds that the House provides because, in the past, provision has simply not been adequate. Those who commit themselves to public service through the House are owed a debt of gratitude. We do not want to overstate that, but it is important that we should look at that issue.
	On the matter of retirement through ill health, it is important that we should introduce the two tiers that the trustees are calling for. That will mean that those who are permanently incapable of any workincluding work in the House of Lordswould get the full pension to which they would be entitled if they were not retiring through ill health and had been able to work until the age of 65. Others, who have only a partial incapacity and who are not permanently incapable of any further workand who might end up in the House of Lordswould receive a pension only in relation to what they had so far earned by virtue of their contributions and the Treasury contributions, but that would not be actuarially reduced by virtue of the fact that they were retiring early.
	It is also important that there should be regular reviews. My hon. Friend the Member for Walsall, North (Mr. Winnick) asked the hon. Member for Bournemouth, West how many people had retired through ill health. I can tell him that the precise figure for the past 11 years is 26, so we are not talking about an enormous number of people. However, there can be a great deal of distress involved not only for the individuals concerned, but for their families. Being a Member of Parliament is an arduous job, not least because of the travel between our constituencies and the House, and if we are to do the job well, we need to throw all our energy into it, as I know all hon. Members seek to do.
	Finally, the hon. Member for North Southwark and Bermondsey (Simon Hughes) said that this was not a Government concern. I think that there are only two regards in which it is a Government concern. The first is that, as my hon. Friend the Member for Walsall, North said, the eyes of the nation are on how we make provision for our own pensions, so it behoves us at this particular time to be careful not to incur additional costs to the taxpayer. The taxpayer already makes significant contributions to the parliamentary pensions fund. Secondly, we are presented with a cost-neutral packageas I have already said, a saving of 0.4 per cent. in one direction and an additional cost, we believe, of 0.4 per cent. in the other direction.

Simon Hughes: rose

Chris Bryant: Those were to be my final words, but I will give way to the hon. Gentleman.

Simon Hughes: Prompted by what the right hon. Member for Islwyn (Mr. Touhig) said, I think I am right in sayingthe Deputy Leader of the House may confirm itthat the average length of service for MPs is for less than 10 years, so we are not talking about large numbers of people with huge pensions accrued over many years. It is too easily assumed by people outside that we are here for ever, whereas many MPs are actually here for a short time rather than a long one.

Chris Bryant: The hon. Gentleman is absolutely right. I do not want to undermine the parliamentary contributory pension fund, or, for that matter, contributory pension funds in any other public service. My right hon. Friend the Member for Islwyn (Mr. Touhig) and I represent remarkably similar seats and many of our constituents will earn considerably less than we earn as MPs. Many of their public sector pensions may be secure, but that does not necessarily mean that they will be very large.
	I fully support the current pensions scheme. The Government are keen to ensure that we do not overburden the taxpayer on account of our contributions, but we obviously need to ensure that proper provision is made for all hon. Members so that they do not live in indigency in their old age.
	 Question  put and  agreed to.

Electoral Commission (Appointment and Remuneration of Chairman)

Chris Bryant: On a point of order, Mr. Deputy Speaker. There are two motions, one of which relates to the appointment of a new commissioner, with the other dealing with pay and remuneration. I wonder whether it would be convenient for the House to have one debate covering those two subjects.

Mr. Deputy Speaker: With the House's permission, we will deal with motions 9 and 10 together.

Peter Viggers: I beg to move,
	That an humble Address be presented to Her Majesty, praying that Her Majesty will appoint Jennifer Watson to the office of chairman of the Electoral Commission with effect from 1 January 2009 for the period ending on 31 December 2012.

Mr. Deputy Speaker: With this, it will be convenient to discuss the following motion:
	That the following provision shall be made with respect to the remuneration and expenses of the Chairman of the Electoral Commission (the chairman):
	(1) In respect of remuneration for service between 1 January 2009 and 31 December 2009, the chairman shall be paid 100,000.
	(2) In respect of the year starting with 1 January 2010 and in respect of any subsequent year starting on the anniversary of her appointment, the chairman shall be paid as remuneration for that year the sum payable during the immediately preceding year increased by the same percentage of that sum as the percentage (if any) or total of the percentages (if more than one) used to 10 increase the salary of a High Court Judge during that immediately preceding year.
	(3) Where during any of the years referred to above the chairman ceases to hold that office, the sum to be paid to her in respect of the part of the year for which she held office shall be such proportion of the sum which would have been due had she completed that year in office as reflects the portion of that period during which she held the office of chairman.
	(4) The chairman shall be reimbursed for any expenses she incurs in connection with the discharge of her duties as chairman on travel, accommodation and subsistence.
	(5) The pension of the chairman shall be calculated broadly by analogy with the pension scheme of the staff of the Commission, thereby delivering a pension based on the Principal Civil Service Pension Scheme.

Peter Viggers: It is unusual for a Back Bencher to be asked to open a debate on a substantive motion, so my first task is to explain why the hon. Member for Gosport is on his feet and not the Minister. The motions before the House today are proposed by members of the Speaker's Committee on the Electoral Commission. The Speaker has important statutory responsibilities in relation to decisions on the appointment and remuneration of the electoral commissioners. However, Mr. Speaker is not in a position to move a motion in the House, so it is in my capacity as a member of the Speaker's Committee who answers on behalf of that Committee that I speak today.
	All hon. Members have had the opportunity to read the report that the Speaker's Committee published on 15 July, which set out how Mr. Speaker discharged his responsibilities under the Political Parties, Elections and Referendums Act 2000 to select a candidate for the post of chair of the Electoral Commission. It informs the House who is on the panel that advises Mr. Speaker on that selection and it is ably chaired by Baroness Fritchie. As a member of the panel, I can answer any questions that colleagues may have on the way in which the panel went about its business or on the reasoning behind the decisions that it and the Speaker's Committee took. The Minister may be better placed than I to pass on to his Ministry of Justice colleagues any queries about the Government's current legislative proposals as they will affect the commission in so far as those proposals are relevant to the matters before the House this evening.
	The panel had to take two decisions: the first on whom to recommend to Mr. Speaker as candidate for the post of chair, and the second on the terms and conditions attaching to that post. Since the commission was set up in 2001, there has been only one chair, Sam Younger. I want to thank him for his leadership of the commission in its formative years. He has many friends in the House, and I am sure that many Members will join in wishing him well. His success in the role is evidenced by the fact that last year he was reappointed for a second term at the request of the House. He bequeaths to his successor an organisation in good shape, ready to face the challenges that are certainly coming. I pay tribute to Sam Younger, and wish him well.

Andrew MacKinlay: The hon. Gentleman said that he and his colleagues were involved in the appointment, and that he could answer any questions about it. I believe that the remuneration figure that appeared on the Order Paper some weeks ago was 150,000. I do not know what has happened sincethere may have been a printing errorbut that is my recollection, and I should like to know what has taken place in the intervening period.
	In a parliamentary answer, the hon. Gentleman indicated that the person whose appointment is proposed today would work for approximately three days a week. Is the recommended 100,000 a pro rata payment? Are we talking about 100,000 a year for a three-day week, or 60,000 a year? I think we should be told, and I should be grateful if the hon. Gentleman provided clarification.

Peter Viggers: The hon. Gentleman has asked some pertinent questions. He will not be surprised to hear that I am about to deal specifically with the two points that he has raised. I shall deal first with the part-time basis and then with the pay, but I will answer the hon. Gentleman's questions in terms.

Bob Spink: Before the hon. Member for Gosport (Sir Peter Viggers) answers those questions, may I join him in paying tribute to Sam Younger? He has worked very hard, and when I speak later I shall cast no aspersions on him whatsoever. He is a great guy.

Peter Viggers: I am grateful to the hon. Gentleman for his comments.
	Since the commission had become a well-established feature of the political landscape, the Committee on Standards in Public Life recommended, in its important report of January 2007, that the post of chairman be held on a part-time basis. The Speaker's Committee accepted that recommendation, and considered it desirable for the post to be filled on a part-time rather than a full-time basis. That underlines the non-executive nature of the role, and is entirely in line with similar public sector appointments. The panel appointed by Mr. Speaker took the same view. Mr. Speaker also wrote to a number of eminent public figures seeking their opinions on the matter, and they were overwhelmingly in favour of moving to a part-time appointment. So, too, were the leading firms of recruitment consultants with whom the panel discussed the question. The post was therefore advertised as involving a commitment of, typically, three days a week.
	The report of the Speaker's Committee also records the original decision, made in March 2008, to maintain the existing level of remuneration for the post, notwithstanding the move to a part-time role. That decision, too, was made after extensive discussion and careful consideration. Again, the panel asked leading consultants for their opinions. These were consistent with the advice received from others, which was that if we really wanted to attract a first-class candidate for the postand in the view of the Speaker's Committee, the post was too important for us to settle for anything lesswe should not reduce the salary from the level set by Parliament.

Bob Spink: Will the hon. Gentleman please put on record for the benefit of Members what Sam Younger is currently paid in his full-time post?

Peter Viggers: I shall come to exactly that point. I am about to deal with the issue of remuneration, and it may be helpful if I do so in my own way.

Rob Marris: The hon. Gentleman referred to the criteria that were adopted. I do not recall whether he used the word consultants, but he said that outside advice had been taken on what criteria were appropriate for the securing of a suitable candidate. Was public servicethat somewhat devalued but to me extremely important factortaken into account? As I said in the Chamber recently in the context of the Information Commissioner, we keep comparing senior public servants doing important jobs with those in the private sector in terms of remuneration, while not taking into account what I consider to be the vital issue of devotion to public service, which often involves a sacrifice in view of what the individual in question could earn in the private sector.

Peter Viggers: I take the hon. Gentleman's point, and when I conclude my arguments, he may feel that it has been well met.
	It is important to note that, pro rata, the original offer was not off the scale for non-executive chairs. The chair of the Child Maintenance and Enforcement Commission is paid at this rate, as are the chairs of HM Revenue and Customs and the Court Service board, and the chair of Ofcom is paid at a slightly higher rate. The fact is that there is a highly competitive market to secure the services of the best people. I can tell the House that two very credible candidates dropped out of this competition, in one case at the very last minute, because they had accepted other offers.
	I need hardly remind Members tonight of the importance of the work of the Electoral Commission to all of us, to our parties and to our constituents. The Committee on Standards in Public Life emphasised this and stressed how important it is for the Electoral Commission to have strong direction and leadership. Accordingly, the post was offered and accepted, with the consent of the Treasury, on the basis of 150,000 a year for a part-time appointment.
	However, events have moved on. It became clear to the Speaker's Committee that the House was unlikely to support the remuneration proposal. We therefore had to reopen the whole question and, in essence, to invite the candidate, Jenny Watson, to accept a pay cut. I recognise that this could hardly be described as best practice, but it reflected the situation we were in. We were very fortunate indeed that Jenny Watson was prepared to go along with this; she could so easily have walked away from it, and the fact that she did not do so is a testament to her commitment to public service and the job. The revised salary of 100,000 a year is very close, pro rata, to the salary of the incumbent, which now stands at 155,000 a year and which would have been uprated next year in line with a previous resolution of the House. It is also well within the range of salaries for non-executive roles of this kind in public service.

Bob Spink: I do not wish to cast any aspersions on the candidate; I have never met her and I was not party to the interviews. Can the hon. Gentleman tell us whether she holds any other posts, and whether she will be doing any other paid work in the other two days or at any other time?

Peter Viggers: In the Speaker's Committee's first report of 2008, what other appointments Jenny Watson has are spelled out, and it is made clear that she will resign from all those posts with the exception of the Audit Commission, although she has also undertaken to review her position there, should it seemwhich is not the advice that has been given to her by various bodiesthat there is a conflict of interests. Therefore, she will remain a member of the Audit Commission.

Andrew MacKinlay: How many days a week, or a month, is the Audit Commission post for?

Peter Viggers: I cannot answer that question as I stand here now, but I will inquire. My understanding is that it is not very demanding in time terms.
	I now turn to the candidate herself, who, in the opinion of the panel, the Speaker's Committee, Mr. Speaker himself and the leaders of all the main political parties, is the right person for this job. Jenny Watson has a breadth of experience few others could match. She has chaired a large public sector organisationthe Equal Opportunities Commissionwith distinction and flair. No less important, she has experience as a regulator. Most crucially in the context of the role it is now proposed she be appointed to perform, she has demonstrated that she can lead an organisation through change, enabling it to develop and evolve without losing its focus, self-confidence or drive. She knows her way around Westminster and local government, and she has an acute understanding of diversity issues. As I can confirm, at interview Jenny Watson's analysis of the Electoral Commission as an organisation, and of the policy environment in which it works and the complex challenges it faces and will face in the coming years, was comprehensive and penetrating. She was the unanimous choice of the panel, she has been endorsed by the Speaker's Committee, she has been approved by all the party leaders, and I therefore have no hesitation in inviting the House to support both motions.

Andrew MacKinlay: I listened carefully to the hon. Member for Gosport (Sir Peter Viggers), and I am pleased that we are taking both these motions together because the two issues are indivisible. Obviously I do not know this particular candidate, but I am sure she has the highest of motives and sense of public service.
	We are charged with considering this afternoon whether this matter has been handled well. The hon. Gentleman was candid enough with the House to indicate that some of these things had not been thought through, and that does not increase my confidence that the decision we are going to make this afternoon is the correct one. To put it simply, we should send the homework back. Wider consultation should be carried out within the various party groups about what is required of this post.
	Originally the salary was going to be 150,000 for three days a week, and I believe the hon. Gentleman said it was felt that that could not get past the House of Commonshon. Members may check that in the official record, if necessary. How right he was. Just because the amount is reduced like this, in an unsophisticated way, that does not mean that a salary of 100,000 for this post is acceptableit is not acceptable to me, because I think it a disproportionate amount. The hon. Gentleman then prayed in aid recruitment consultants who thought this figure was okaywell they would, wouldn't they? If ever there were an abuse and waste of public money, it is recruitment consultants. It is time this House of Commons baulked at this sort of thing, because many people are qualified to do this job, could do it to the satisfaction of all the political groups in this House and throughout the United Kingdom, and would do it for a much reduced salary.
	I am favourably disposed towards the amendment tabled by the hon. Member for Castle Point (Bob Spink), which proposes that the salary should be comparable to the pay of a Member of Parliament. That would be a reasonable compromise. One of the reasons why I shall invite the House to reject both these motionsI think that we will probably have to divide the House on the first oneis because I want us to send the homework back. If we reject the appointment, this good lady can still be considered, but that will be following further consultation and reflection by the hon. Member for Gosport and his colleagues, and following discussions within the party groups.

Simon Hughes: rose

Rob Marris: rose

Andrew MacKinlay: I will give way to the hon. Member for North Southwark and Bermondsey (Simon Hughes) and then to my hon. Friend.

Mr. Deputy Speaker: Order. Before the hon. Gentleman gives way to other hon. Members, I should advise him that amendment (a), which stands in the name of the hon. Member for Castle Point (Bob Spink) and to which he just referred, has not been selected.

Andrew MacKinlay: I am grateful for that clarification, Mr. Deputy Speaker. In a sense, it buttresses my point that the Division must come on the first motion.

Mr. Deputy Speaker: I just wanted to make the position clear. I call Simon Hughes.

Simon Hughes: The hon. Member for Thurrock (Andrew Mackinlay) and I were both present for a debate about a fortnight ago on the salary of the Information Commissioner. Does he take the view that jobs such as that one and thispublic sector jobs on which Parliament has to make the decision, of which there are a fewshould have comparable salaries? Should the Information Commissioner's job be valued at the same worthper week, per month or per yearas that of the chair of the Electoral Commission?

Andrew MacKinlay: The jobs should probably be in the same band, but there is a danger of our comparing an apple with an orange. The hon. Member for Gosport prayed in aid this candidate's work on regulatory bodies. Special qualities are probably required for jobs on some of the regulatory bodies and even for the job of Information Commissioner; indeed, people would look for candidates in a different reservoir. I do not think we are comparing like with like.
	I recognise how imperative this role is, but my knowledge of public life means I am aware that many people could undertake this job with enthusiasm and to the satisfaction of the body politic of the United Kingdom, and could do so on a much lower salary. The hon. Member for Gosport did not say that this is so, but I imagine these wretched consultantsI used that adjective deliberately, out of despairwould do the initial selection. How kind of them! Even if there had been an open advertisement, the considerations I mention would not have reached the people making the recommended appointment.

Rob Marris: My understandingand I was here for the previous debateis that the Information Commissioner is an executive position. This debate is about the chair of a body, which is somewhat different. The Information Commissioner will be on 140,000 a year for a five-day week. The individual we are discussingI do not know whether she is suitable for the job or not, and I make no commentwill be on the equivalent of nearly 167,000 a year, which is quite a bit more than the incumbent who is on 155,000.

Andrew MacKinlay: I am grateful for both those interventions because they buttress my case. The latter intervention makes the point that we are compounding the perversity of such appointments. All the indications areand the hon. Member for Gosport was frank about thisthat it has been handled very clumsily. We need a period of reflection.
	The hon. Gentleman also told the House that, if appointed, the good lady will resign from all her other appointments except that of board member of the Audit Commission. But I suspect that there is a handsome salary for that; perhaps we could be told if that is so, and how many days a week it requires. If it is three days, basic arithmetic tells us that that person would be overworked, and that would be distressing. We have far too many examples of quango man and quango woman, and I am not prepared to put up with it any longer.

John Horam: Does the hon. Gentleman agree that all quango appointments of this kindmany are similar, but some are quite differentshould be subject to scrutiny by the House, not necessarily in a debate on the Floor of the House as we are having now, but by the appropriate Select Committee? That would be a way forward for the consideration of remuneration of individuals in relation to the jobs they perform.  [ Interruption. ]

Andrew MacKinlay: The hon. Gentleman will have heard the echo from behind me. Many of us think there should be some scrutiny of appointments, the ground rules, the terms and conditions of services and the pay and rations by the appropriate Select Committee before we embark on the advertisement and the selection of a shortlist. If we reject this proposal, perhaps it will signal a change from the sloppy appointments to which, by our silence, we have acquiesced for too long.

Denis MacShane: As so often, my hon. Friend speaks for the House of Commons in the wider sense. I do not want to see the Mace put down a notch to turn this into a remuneration Committee of the whole House on every public appointment. That would be a nightmare, but the symptoms betray deep concern with the Electoral Commission itself. That is why I would be very happy to vote with my hon. Friend. I have much respect and affection for the hon. Member for Gosport (Sir Peter Viggers), who works very hard, but the Electoral Commission is profoundly flawed, and we need a deeper debate on that, rather than having this displacement discussion about the salary of this poor woman.

Andrew MacKinlay: I do not want to labour the point, but I got the Library to give me the job description for the post in question. Frankly, if that job description is to be fulfilled, three days a week is wholly inadequate. I realise that this is not a packed House, but we may have the opportunity later to persuade some people to be prudent and reject this motion so that the body politicthe political parties and Memberscan reflect on the situation. We could have a better appointment, either with the same candidate or with a wider trawl, and dispense with the so-called recruitment consultants. We could have a new beginning, with appointments compared with one another. We could consider the pool for likely candidates and reflect the marketplace. As important as this job is, the marketplace is probably much wider than has been reflected so far. I hope that the House will reject the motion, as that would do a great deal for the Electoral Commission and for the House of Commons.

Alan Whitehead: Following the intervention by my right hon. Friend the Member for Rotherham (Mr. MacShane), does my hon. Friend not agree that it is rather important to ensure right now that we have a chair of the Electoral Commission? The debate about the commission's future, which is important, needs to be held. The House is halfway through consideration of the Political Parties and Elections Bill, which will have substantial implications for the work of the Electoral Commission in the future. Does my hon. Friend not agree that in principle it would be a very good idea if we made sure that the Electoral Commission had a new chair, who could take the issues forward? Is he sure in his own mind that using the debate this evening as a substitute for the proper debate on the future of the Electoral Commission that ought to be held is a path that should not be pursued?

Andrew MacKinlay: My hon. Friend rightly raises the critical stage we have reached both for the legislation before this House and for the work of the Electoral Commission. Of course, it is a sensitive time. I would not choose to make the changes at this stage. It is not for the House of Commons to micro-manage the situation, but my point is still valid. For instance, was it impossible to ask the existing chairman to stay on for a period? In a sense, my hon. Friend's point supports the notion that that chairman should see things through and should provide continuity. Presumably, there is a vice-chairman, who is no doubt on a substantial salary. He or she could act up. The timing is not ideal, but if we let things go, we will have abdicated our responsibility to our constituents, who, if they saw this debate or noticed any reports of it, would see it as a disproportionate expenditure and an offence at this time of constraints. That is my case.

Shailesh Vara: I am afraid I shall have to disappoint the hon. Member for Thurrock (Andrew Mackinlay) by saying that I support the motions, the remuneration and the appointment in general.
	As the Speaker's Committee and my hon. Friend the Member for Gosport (Sir Peter Viggers) made clear, Ms Jenny Watson has an excellent CV that demonstrates experience, leadership and management skills, all of which will be required to steer the Electoral Commission forward over the coming years. She has a proven track record of public service, as we have heard. For example, she was chairman of the Equal Opportunities Commission as well as a member of the board of the Audit Commission. I am told on reliable authority by several people that she served with distinction in both roles and that there was no reason to reproach her in any way.
	The role of the chairman of the Electoral Commission is high profile, and it is likely to become even more so, Mr. Deputy Chairman, as new legislation on the financing of political parties progresses through the House. When that legislation is finally enacted, the Electoral Commission will face different and difficult challenges to ensure that any new financing regime is properly complied with. Having seen Ms Watson's CV and read the glowing tribute of the Speaker's Committee that recommends her appointment, I think that she should be more than able to deal with the issues that will arise.
	May I also put on record our thanks to the outgoing chairman of the Commission, Mr. Sam Younger, for the service he has given since the Commission was created in 2001? Mr. Younger's place in political history is secure as the man who got the commission up and running. We thank him for all his efforts in the past few years.
	As regards remuneration, Mr. Deputy Chairman, if we are to attract the right person for the job it makes sense that they should be paid a competitive salary commensurate with their experience, skills and qualifications. The role of chairman of the Electoral Commission requires many qualities, such as leadership, strategic vision, management and so on. Let us not forget the high-profile nature of the job.

Rob Marris: Will the hon. Gentleman give way?

Shailesh Vara: I am mindful that we have two debates merged into one, for which we have only one and a half hours. There have been several interventions already, and I am aware that several Members wish to speak. I trust that the hon. Gentleman will forgive me if I do not allow him to intervene, but I intend to keep my comments brief to ensure that as many hon. Members as possible have an opportunity to speak. I trust that he will bear with me.
	As I said, the role of chairman requires many qualities, and it is also very high profile.

Ken Purchase: Anyone could do it!

Shailesh Vara: From a sedentary position, the hon. Gentleman says that anyone could do it, but I am minded to say that, if he felt he could do it, he should have put his name forward. I am also tempted to say that he probably would not have got the job.
	We should be mindful that the salary that Ms Watson has accepted is much less than the one initially advertised. The suitability of the candidate for the post of chairman is not in doubt and, if we are to have the right candidate, we must be prepared to pay the right amount. Given all the circumstances, I am happy to rely on the judgment of those trusted with making the final selection regarding the final amount of pay for this position.
	I conclude by thanking my hon. Friend the Member for Gosport and his colleagues for undertaking this task. They put in a lot of hard work, and they did their job with distinction. For that, I thank them.

Gordon Prentice: I am going to disappoint my friends down there by saying that I am not going to concentrate on Jenny Watson's salary. Instead, I am going to talk about the nature of the job, and perhaps say a little bit about Jenny Watson.
	I support her appointment. She is a former chair of the Equal Opportunities Commission, and is a continuing member of the Audit Commission. In no sense is that a full-time job, and it is probably not even a part-time one: I do not know how often the commission meets, but it cannot be very often. Previously, she worked for Liberty, Charter88 and the Human Rights Act research unit at King's college, London. She is a published author, and an independent director of the Banking Code Standards Board. She is also a deputy chair of the UK's Committee on Radioactive Waste Management, and of the advisory board of the British Institute of Human Rights. So she has had experience in a very large number of fields, but what kind of qualities should we expect from the chair of the Electoral Commission?
	I say that we need someone of robust independence, who is willing to speak out and to challengeand, if necessary, face downthe Government of the day. Governments come and Governments go, but the Electoral Commission, as part of our constitutional framework, is there to police the electoral system and keep our politics clean. Of all the ethical and regulatory watchdogs, the Electoral Commission may be the most important.
	The Electoral Commission has barked in the past, and the Government have ignored it. It barked in 2003, when it made a call for individual voter registration. The Government said that they would not go down that road, or include it in the Bill that became the Electoral Administration Act 2006.
	Astonishingly, the Electoral Commission went public, and saidin publicthat it disagreed with the Government's position and that it wanted individual voter registration. That was picked up by the Committee on Standards in Public Life, the ethical watchdog that presides over all the others. The hon. Member for Gosport (Sir Peter Viggers) referred to it earlier, and it was also in favour of individual voter registration.
	I am not telling tales out of school, but I remember having a conversation with Sam Younger and asking him, If you and the rest of the Electoral Commission thought that the way in which our electoral system was being compromised was so important that it required you to speak out publicly, you should have resigned. That would have forced the Government to think again.
	I am very much in favour of individual voter registration. I have a constituent who is one of 27 adults living in a house of 44 people, and I do not know who the head of household is.

Eleanor Laing: The hon. Gentleman may have noticed during the passage of the Political Parties and Elections Bill that the electoral commissioner, instead of resigning and running away from the issue, persisted with individual voter registration, as did the Opposition. I tabled an amendment to the Bill, which of course the hon. Gentleman's Government voted down, but those of us who believe in individual voter registration still persist, with the backing of the Electoral Commission, quite properly and democratically.

Gordon Prentice: The point is that resignation is the nuclear option. I like Sam Younger and I have no problems with him as an individual, but if the Electoral Commission really believes that our electoral system is being compromised by household registration, its chair should have resigned. That is my view, so we differ.
	As I was saying, my constituent shares a house with 27 members of his huge extended family. Someone would have signed the electoral registration form as the designated head of household, and when I wrote to the chief executive of my local council

Mr. Deputy Speaker: Order. I am reluctant to stop the hon. Gentleman, but this is not a general debate about the electoral system. It is about two specific motions, so perhaps he could direct his remarks to them.

Gordon Prentice: I am trying hard to stay in order, Mr. Deputy Speaker, but I want to draw the attention of the House to the importance of the Electoral Commission, which may have a bearing on salary, remuneration and all those other matters.
	Our electoral practices need constant running repairs. There have been allegations of fraud in Birmingham, Slough and Peterborough. The Parliamentary Assembly of the Council of Europe has floated the suggestion that electoral practices should be monitored in the United Kingdom, which is absolutely astonishing. Whoever chairs the Electoral Commission has an extremely important job to do and I am happy to endorse Jenny Watson as the new chair.

Simon Hughes: I want to start where the hon. Member for Pendle (Mr. Prentice) left off. I support the Electoral Commission as a body. We need it to be strong and robust and I wish it to be stronger and more robust in future than it has been until now.
	I am glad that the proposal that the commission has some political appointees has been accepted. People with political experience will help it to be more robust; they will be a minority, not a majority, and will make it do its job better. We should change our procedures so that when the Electoral Commission makes a recommendation, such as the one about individual voter registration, which has been the most controversial one recently and was referred to by the hon. Member for Epping Forest (Mrs. Laing), it is automatically laid before the House. There has to be some mechanismit might be proposed by the representative of the Speaker's Committeebut there should be a motion before the House so that if the Government want to change it they have to table an amendment. We would thus be able to see what the Electoral Commissionthe independent body set up by Parliamentis proposing. Such a motion should also be laid within, say, 21 days of the commission making its recommendation. At present, when the commission makes a report, the Government can sit on itthey can deliberate, form a view, stall, delay and disagree, and in the end they can use their payroll vote and their majority to block things.
	I hope we have a robust Electoral Commission. In the debates on the Political Parties and Elections Bill and elsewhere, I shall be looking to ensure that we strengthen the commission in that respect. In that context, I too pay tribute to Sam Younger. I have always found him courteous, proactive, consistent, accommodating and assiduous, but clearly independent. Through him, I thank his staff, who have been extremely helpful and made it their business to be available to MPs, both on a party and individual basis. They attend our conferences to make sure that our parties understand the score and they do their job well and publicly, so I hope we can recognise that the Electoral Commission under its first chair has done a good job.
	Where do we go now? We clearly need a new chair. I do not know Jennifer Watson well, although I have met her. In my view, she is clearly eminently qualified to do the job. The hon. Member for Pendle read out parts of her work history. It is set out in the helpful report that the Speaker's Committee on the Electoral Commission has given us as its first report of 2008 on this subject. Not least because of her recent job as the chair of the Equal Opportunities Commission, in which role I have seen her work, she comes with great credibility and great authority. Hers is a very good appointment. As the hon. Gentleman said in his introduction, it is surprising in a way that her name is still in the frame, given that, putting it crudely, she got messed around in the process. She applied; she was asked to do the job at one salary, but in the end, people said, We'd like you to do the job, but we're cutting the salary by a third.

Ken Purchase: About 50,000.

Simon Hughes: I will come to the salary in a moment, but Jennifer Watson will do the job admirably well.
	Of course, there is a difference between this decision and the one that we made a couple weeks ago with the Information Commissioner: this one involves the appointment of the commissioners, whereas last time, as was rightly said, we were appointing a chief executive. This is a different role. Of course, the Electoral Commission will have a chief executive as well. Question: what is the right salary? I am always uncomfortable once we get into six-figure sums for salaries for part-time jobs, but I am persuaded that, given where we are, we probably cannot get someone of the quality of the proposed new chair to do the job for less than that sort of money.

Ken Purchase: But 25,000, plus expenses, is more than enough.

Simon Hughes: No, no; I am afraid that that is a ridiculous and nonsensical proposal.

Ken Purchase: Go and tell that to the dole queue.

Simon Hughes: The hon. Gentleman may not like the Electoral Commission. I have heard mutterings that he does not like it as a body, but it is an important, robust body, and we need it. If we are to give it authority, it needs a chair who will have authority, speak with authority, be independent and robust and speak in the public domain, and Jennifer Watson will do that in my view. It is also good that the chair will be a woman, but that is a separate but not irrelevant issue, given that one of the deficiencies of the House is the continuing relatively small number of women who are Members of Parliament.
	The salary is appropriate, given where we are, for the job at this time. We should be grateful to Jennifer Watson for accepting the revised terms, which are much less than she had accepted. It is clear from the proposal that it will be a three-day-a-week job. She will do it full-time for three days a week. She may do more than 24 hours over the three days. I have not heard the result of the vote in the European Parliament on the European working time directive. Personally, I support the UK's continuing opt-out, and I hope that the European Parliament has voted for that. I imagine that she might do more than 24 hours a week, which would be three eight-hour days.

Ken Purchase: It is only a desk job.

Simon Hughes: The hon. Gentleman's job is in large part a desk job, and he is paid 60,000-odd for his job. The hon. Member for Castle Point (Bob Spink) proposes that the salary should be the same as that of MPs. We have debated MPs' salaries. We have come to the view that they should be about 60 grand. Our constituents probably think that that is about right on balance. Some of them think that it is too much; some think that it is too little. However, I want to make the wider point, although we cannot debate it now, that there is a debate to be had about the level of top salaries in the public and the private sectors. For me, the issue is that, when some of the private sector has grossly and excessively paid people ridiculous and silly salaries and failedwe have now seen the result of that ridiculous overstretchingit is not surprising that the public sector has had to offer higher salaries to be in the same market for good people.

Rob Marris: And that should not be so.

Simon Hughes: I will come to that in a moment, but the reality is that people have a choicewhether to go to a private or a public sector joband often, with this sort of salary, they may choose a public sector job, as Jennifer Watson did, but without such a salary, they may go off to the private sector.

David Taylor: Of course, the hon. Gentleman is right that the time is now ripe for a re-evaluation of top salaries in the public sector. However, does he acknowledge that the salaries attached to jobs such as this emerge from cosy, self-seeking, incestuous cabals in the recruitment agencies who promote that level of pay with little reference to other areas of the public sector? This matter has a strong resemblance to the so-called independent remuneration committees that are so evident and ubiquitous in the private sector. We have to start to reverse the spiral somewhere.

Mr. Deputy Speaker: Order. The hon. Member for North Southwark and Bermondsey (Simon Hughes) himself said that this was not the time or place for a debate about the wider issue, but he has succeeded in igniting one. May I suggest that we go back to the specific terms of the motions that we are discussing?

Simon Hughes: As I saw you move towards the front of your Chair earlier, Mr. Deputy Speaker, I was careful to ensure that I kept close to the motion. I am aware of the danger. However, before I finish I wantif it is in order, of courseto make sure that I link this with the fact that we are asked to appoint somebody at a specific salary. There is a relativity point, which I hope you will accept, Mr. Deputy Speaker, is properly in order.

Gordon Prentice: I think that it would help the House if Members knew that the Public Administration Committee is about to embark on an inquiry into public sector salaries early next year.

Mr. Deputy Speaker: Order. That has successfully doused the debate.

Simon Hughes: It will certainly allow the fire to be brought under control much more quicklyI agree with that, Mr. Deputy Speaker. I did not know about the inquiry, so the hon. Gentleman's intervention is very helpful.
	I support the measure and I recommend that my colleagues support the two motions on the Order Paper. I hope that Jennifer Watson takes up her post in the new year, and does so robustly. However, I hope that before similar proposals are put before us on other appointments that are in our gift, we have completed the exercise of comparabilityacross not only the public sector but the private sector. One of the scandals of Britain in 2008 is that the gap between the well-off and less well-off has widened, and far too many people are paid ridiculously high salaries when many of our constituents have very little indeed. Unless we redress that, every debate on such matters will be provocative and a lot of people will be regarded as far too well paid relative to most of the people whom they seek to serve.

Rob Marris: First, I thank the House of Commons Commission for its helpful report, on which a lot of work has been done, led by the hon. Member for Gosport (Sir Peter Viggers). I also thank the hon. Gentleman for his earlier remarks, which illuminated my own thoughts on this matter.
	On the first motion, I have never met Jenny Watson, as I said in an intervention, and I have no idea about her other than what has been said in this debate and what is in the report. From what has been said in the debate, particularly by my hon. Friend the Member for Pendle (Mr. Prentice), she sounds like an excellent candidate for the role. However, the direction of my remarks will be to agree with my hon. Friend the Member for Thurrock (Andrew Mackinlay). The two motionsone to appoint a specific individual and the other dealing with the remuneration of whoever the chair of the Electoral Commission might bewill be taken together. That means that because I have severe reservations about the remuneration, which I will come to in a moment when I speak to the second motion, I will be driven to reject this candidate at this stage under the first motion.
	The hon. Member for Gosport helpfully pointed out that the initial decision, as I understand ithe will correct me if I misunderstoodwas to appoint this candidate on pay of 150,000 for a three-day week. There was then, I suspect, a debate among his Committee, and perhaps others, to the effect that that might not find favour in the House of Commons and that it should rethink the approach and the remuneration. I suspect strongly, although I have no direct evidence, that he and his colleagues were right about that, and that a proposal for 150,000 for a three-day week would not have succeeded before this Chamber.
	Although one can talk about the excellent qualities that the candidate referred to in the first motion seems to have, and the fact that there may well be a limited number of people who could do such a job as effectively as she could, there are conversely a limited number of positions in connection with such work available for people who have those sorts of qualifications. That must come into the equation when one is appointing a person to any job.
	Before I entered this place, I was one of the leading experts in the legal profession in the west midlands on vibration white finger, although the field was small. I say that to illuminate my point. However, if I had sought a job at a firm other than the one in which I was a partner, I would have found it difficult, because there are not a lot of jobs around for legal experts on vibration white finger.  [Interruption.] I had to become an MP, of course, as the Deputy Leader of the House says from a sedentary position. The issue is not only the qualities and abilities of the candidatein this case Jennifer Watson. There are a limited number of people who could do such jobs, but there are also a limited number of those jobs available; that has to be fed into our considerations.
	The second motion mentions 100,000 for a three-day week. In round terms, pro rata, that is 167,000 a year for a five-day week. The current incumbent is on 155,000 for a five-day week. That is not a vast pay increaseit is in the order of 8 per cent., off the top of my headbut it is a pay increase. That causes me concern, given that we are discussing the chair of a body, as I said in an interventionthe point was picked up by the hon. Member for North Southwark and Bermondsey (Simon Hughes)and not the chief executive. From memory, the Information Commissioner, whose remuneration we debated a couple of weeks ago, receives 140,000 a year as chief executive of an organisation that has something like 286,000 employees.

Alan Beith: It has 286 employees.

Rob Marris: Yes, and a budget of something like 13 million. It is an executive position. Tonight, we are talking about a chair who will be on something like 15 per cent. more per year, pro rata, than the Information Commissioner, who has an executive position. The Information Commissioner is also an important public role that touches the lives of all our constituents, in terms of data protection, freedom of information requests and so on.

David Taylor: We were told, in an effort to pacify, reassure and convince us, that the salary is competitive, as though the job were being passed around a small number of candidates with lots of other jobs, and as though the salary had to be upped to the point at which someone would take it. Surely it is the other way around: surely there are substantial numbers of people out there who could do the jobI am sure that the candidate is a fine personand who would do it for rather less than the figure that we are talking about.

Rob Marris: I agree with my hon. Friend, to the extent that I agree that there is a substantial number of people out therethousands in my constituencywho would do the job for 100,000 for three days a week, but with all due respect to my constituents, there are not thousands of them who could do that difficult job. I am not sure that there are vast numbers of people who could do the job and who would wish to put their name forwardthat is, who do not like their current job, are unemployed or have three days a week spare. However, as I was saying earlier, there are a limited number of such positions for people who have those skills.
	We have to bear in mind the notion of public service when we consider the remuneration of the individual. In the public sector, there should of course be remuneration, so that people in the public sector who have a sense of public service can contribute and still pay their mortgage, eat and so on, and so that we get people with certain qualities, but there should not be direct comparison with what an individual with a given set of skills could earn in the private sector.
	Looking around the House, I see quite a number of right hon. and hon. Members, including myself, who took pay cuts to come here because of a notion of public service. There is, I am convinced, an even larger number of right hon. and hon. Members who could earn more than they do as Members of Parliament on leaving this place. The reason why they do not leave, and the reason why they are prepared to take a pay cut when they come here, is the notion of public service. The job of chair of the Electoral Commission should involve the notion of public service.
	I pay tribute to Jenny Watson for what appears to be her notion of public service. She put her name forward, as I understand it, for a package of 150,000 for three days a week. It was then suggested to her, as the hon. Member for Gosport pointed out, that that may not get through the House of Commons, and she was asked to reconsider the job at 100,000 for three days a week. She said yesor the motion would not be before us. That is someone who has knocked off a third of the pay for the role that they thought they were going to get, and she clearly seems to have a notion of public serviceunless she could not get another job, although we know that she has one, which is another three days a week or so. However, I am so uneasy about the way that the situation has come about and the remuneration for a chair of 167,000 pro rata that I will be driven to vote against both motions, even though I have no dispute whatever with the candidate.

Bob Spink: Thank you, Mr. Deputy Chairman. I feel a little like Scrooge

Mr. Deputy Speaker: Order. The term Deputy Chairman has crept in now for the third time. The hon. Gentleman knows that that is not correct.

Bob Spink: I apologise, Mr. Deputy Speaker.
	I feel a little like Scrooge and a little embarrassed that we are even debating an individual and her salary. It seems somewhat below what we should be doing in the Chamber, but we have to do it. It is our duty, so we must approach that task diligently, no matter how embarrassing.
	I start by thanking the hon. Member for Gosport (Sir Peter Viggers) for all that he has done, his courtesy and his help in the matter. He has done a sterling job and his words earlier were very helpful, so I thank him most sincerely.
	Let me give the House a little of the history. There was a motion on the Order Paper some three weeks ago for a salary of 150,000. I looked at that and thought it was excessive. It was equivalent to a full-time salary of 250,000 a year for a chairmanship. I immediately banged down an amendment to reduce that salary to the level of salary of a Member of Parliament. I thought that that was a reasonable level of pay for a public servant. Excellent arguments have been made about public service, which is a large factor. With the pension and other benefits that go with it, a salary of 250,000 a year is a very big deal.
	Now, Mr. Chairmansorry, Mr. Deputy Speaker; I think it is because we are debating the subject of the chairman of the commission that I keep making the mistake. When my amendment was tabled, the motion was withdrawn and immediately replaced with a motion for a salary not of 150,000, but of 100,000. That equates to 167,000 a year, with pension and other benefits, which is still quite a substantial salary for such a chairmanship position. It is about the same salary as the Prime Minister gets. I thought it appropriate to table an amendment reducing the 100,000 to the level of salary of a Member of Parliament. That amendment was not selected so we will not debate it tonight.
	That change from 150,000 to 100,00 a year in salary has saved the public purse 250,000 over the next four years, along with the pension and benefits. That is quite a substantial sum, so this is not an insubstantial debate. There was a nice round figure of 150,000, and now there is a nice round figure of 100,000, and I wondered where it came from. Let me tell hon. Members where it came from. It was plucked out of thin air. There is no analysis, no job evaluation, no Hay-MSL comparison of salaries. All those tools are available.
	There may have been recruitment consultants who were consulted and gave the answer that was sought, and I wonder how much they were paid. Were they paid a percentage of the salary? I suspect that they were, in which case they would want to see the salary higher [Interruption.] Higher or lower? Higher. That is what recruitment consultants do. I know that extremely well, and the House knows that. Was there a formal analysis? Was Hay-MSL used? Was there any job evaluation? If there was, why has that evidence not been presented to the House? It seems to me that the 100,000 was plucked out of thin air.
	I come now to the real debate that I wanted and why I challenged the salary in the first place. When pay is being decidedthat is what we are doing tonightit is absolutely right that performance should be considered. What we are considering represents an increase of about 8 per cent. on the current incumbent's salary and we would all agree that performance in the job is an essential consideration.
	The Electoral Commission has been warmly praised; the hon. Member for North Southwark and Bermondsey (Simon Hughes) said that it was important, and I agree. It is crucial. The hon. Gentleman said that it was available, courteous and accommodating and that its representatives were nice people; we have all said such things. We know that Sam Younger is a great guy.

Simon Hughes: And robust.

Bob Spink: The hon. Gentleman says robust; I would challenge him on that.
	Having said all that, I ask what those representatives have done in the job. What has happened during the period of the Electoral Commission's existence? If we look at the facts, we see that it has been a conspicuous failure. The most obvious measure of the health of our democracy and of how well the Electoral Commission is working is what has happened to turnout at elections. That has been falling. When I was first elected in 1992, I was voted in on an 82 per cent. turnout; last time, I think it was below 60 per cent. That indicates a conspicuous failure indeed.
	There has been no indication tonight about what this candidate will do to put that failure right. What skills will she bring to the job which will enable her to bring in the innovative, flexible and safe voting options that will enable us to drive turnout at elections back up and improve the health of our democracy as we surely should? While I am on the subject, I should say that the safety of elections is also spiralling out of control. Electoral fraudparticularly postal vote fraudhas been getting more and more common during the Electoral Commission's term of office.
	We also see electoral abuses such as the fact that the Conservative party continues to be allowed to fund, with 30,000 or 40,000, the campaigning for a candidate in marginal constituencies before the election is called. That is totally against any public perception of fair play and the spirit of our democracy. What has the Electoral Commission done to stop that? Nothingit is still going on.

Simon Hughes: The hon. Gentleman has a perfectly reasonable set of complaints about our political process, but none of them is fairly directed at the Electoral Commission. It cannot decide what percentage of people vote. It cannot write new laws; we do that. If the Tory party gives such huge sums in funds for campaigning for seats, that is because we have allowed it to do that and Parliament has not changed the law. The hon. Gentleman should please not blame the Electoral Commission for things that are the fault of the Parliament of the United Kingdom.

Bob Spink: I accept the hon. Gentleman's complaint in part, but the hon. Member for Pendle (Mr. Prentice) made another point more eloquently than I could: if the Electoral Commission wanted to, it could have taken the nuclear option on any of those issues and forced the hand of the Government and Parliament to make changes that would have improved the health of our electoral system and democracy.

Gordon Prentice: I should say to the hon. Member for North Southwark and Bermondsey (Simon Hughes) that Alistair Graham, the former chair of the Committee on Standards in Public Life, was publicly very critical of the Electoral Commission. The hon. Member for Castle Point (Bob Spink) is absolutely right.

Bob Spink: I am grateful for that support from the opposite Benches; I am getting more and more support from them these days.
	There has been another failure of the Electoral Commission, and it relates to the commission's direct responsibility: its failure to deal with the transgressions of electoral returning officers.

Mr. Deputy Speaker: Order. I have to say to the hon. Gentleman that this is not a debate about the past performance of the Electoral Commission. That is not within the terms of the motions. A slight reference to that might be acceptable, but we cannot have the sort of debate that the hon. Gentleman appears to be conducting.

Bob Spink: I accept that. I realise that Christmas is coming fast, and I wish you, and all who work in this House in any capacity a very happy Christmas, by the way

Mr. Deputy Speaker: Order. The hon. Gentleman is now way out of order, however agreeable his sentiments may be.

Bob Spink: I will come straight back into order. We would have liked to have heard about how this particular candidate will address these shortcomings, but I take your advice, Mr. Deputy Speaker.

Fraser Kemp: We heard earlier lots of analogies from the private sector. In the private sector, incentives and performance-related pay may be used. The hon. Gentleman listed some of the objectives of the commission. Would he support a system whereby, during the period of office, performance-related pay would apply if certain key criteria laid down by Parliament were met?

Bob Spink: That is an excellent idea. The hon. Gentleman can achieve that by voting against the proposal, so that those behind it can do their homework, as the hon. Member for Thurrock (Andrew Mackinlay) suggested, and come back to the House with a better scheme.

David Taylor: I think that this point is in order, Mr. Deputy Speaker. A performance indicator for the Electoral Commission might assist in future remuneration discussions, but we should certainly not choose electoral turnout. It was 87 per cent. in North-West Leicestershire in 1992the highest in the country. The responsibility for turnout, as the hon. Member for North Southwark and Bermondsey (Simon Hughes) said, lies in this place. We should go for something like the level of electoral registration. There may be some sense in that.

Bob Spink: We are now spoilt for choice with excellent ideas and innovations. I hope that the House will divide tonight. I hope that we will reject the measure, so that a more well-thought-out set of proposals will be put before the House which will enable us to pick the right candidate, who will address the issues raised while being paid the right level of salary.
	My final point is a swipe at quangos. The public perceive that it is a matter of jobs for the boys, and that we are prepared to pay them public money; we can throw it around. We are not going to throw it at teachers, policemen or firemen when they come, cap in hand, for their pay increases. They will be told, Sorry, there is nothing in the cupboard for you. But here we are, throwing public money at our friends. That is how the public perceive the situation, and we must change it. This debate is embarrassing, and we really should not be having it in this Chamber.

Alan Whitehead: If we do reject these motions tonight, the public will not say that it is about jobs for the boys, but that the boys have decided that there should not be a job. If we put ourselves in that position, we will send a worrying and damaging message about the real debate on the Electoral Commission. Unlike other regulators, the commission is not a quango regulator; instead it directly, and often intimately, affects the activities and lives of every Member of this House.
	It is important that we get the right person to be the new chair of the Electoral Commission. Whatever we may think about the detail of the procedures governing the proposals on the appointment and final salary, the debate should not swing around whether we appoint someone or not. Discussions about procedures may be carried on by other means. We have heard the proposed salary compared with that of the Prime Minister, but it is lower than the salary of a local authority chief executive. It is not much higher than the salary of a senior electoral registration officer, whose role is to increase voter turnout, and who has a fairly intimate relationship [ Interruption. ] I said a little higher.

Rob Marris: Double.

Alan Whitehead: Perhaps we should look at that.

Simon Hughes: I challenge the hon. Gentleman to find any electoral registration officer in any local authority[Hon. Members: Returning officer.] Returning officers are the chief executives, but the people who deal with elections on a day-to-day basis are paid 20,000, 30,000 or 40,000, not 140,000.

Alan Whitehead: As far as public sector pay is concerned, I do not think that the suggested salary is completely out of line with the sort of salaries that are paid to those in public service work such as local authority chief executives. I accept that it is quite a bit more than what local electoral registration officers are paidalthough that varies in different local authoritiesbut the suggested salary is not comparable with, say, the quite obscene private sector salaries that are paid for what appears to be very little work on boards, for non-executive directorships and so on, which the House should quite properly continue to be concerned about.
	What I want to emphasise about the appointmenthow we think about it and how we vote on it this eveningis not just the message that may be sent out if it is believed that we are having a proxy debate about the Electoral Commission, rather than a real debate about appointing someone to head it. If that is believed to be case, the message that we will send out by rejecting the motion this evening will have a wholly destructive effect on the necessary future relationship between this House and the Electoral Commission.
	It is essential that the Electoral Commission should be independent and robust, that it should speak up when it needs to, that it should be heard when it speaks up and that it should be seen to be holding the ring properly and impartially in electoral matters and on a range of issues that relate to them. Indeed, the Political Parties and Elections Bill, which is shortly to return to this House on Report, will be seen almost as a new beginning for the Electoral Commission and a number of the things that it does, in terms of who is a commissioner, the proposed changes in the appointment of commissioners, which the hon. Member for North Southwark and Bermondsey (Simon Hughes) mentioned, the Electoral Commission's powersperhaps amendments tabled on Report will eventually find their way into the Billtrigger mechanisms for electoral spending and possibly even registration.
	All those matters will centrally involve the Electoral Commission. At that new phase in its life, it is vital that the Electoral Commission should have a chairman, be fully functioning and work properly, robustly and independently, in the way that has been described. If we in this House say tonight, Let's not make an appointment. Let's consider everything for a little while and come back later, but then introduce that new stage, the Electoral Commission will appear to be without leadershiprudderless and without a way forward. At that point, it may be said that that result arose because the House deliberately connived at it, and not for any other reason. If that is thought to be the case, it will be a sorry outcome.
	I am sure that the discussions that hon. Members have had this evening have not intentionally aimed at that outcome. I am sure, too, not only that a proper discussion of the Electoral Commission's role can take place when we debate the Bill on Report and at other stages, but that there ought to be an ongoing examination of whether some of the things that the Electoral Commission has done in the past or will do in the future are completely right. Those matters, however, are not matters for debate this evening. It is important not only that we make the appointment and ensure that the Electoral Commission should have access to the powers and constraints under the legislation that is currently passing through the House to do its job, but that it is headed in a way that makes that possible, that a public announcement is made that that is the way forward that we all want to take and, above all, that we support the independence and future work of the Electoral Commission.

Ken Purchase: This debate is perhaps more important than we imagine. I wonder whether other Members share my view that the rise of the quangocracy has coincided exactly with the fall in the respect in which this House is held. The more we have given away to so-called independents, the less respect we have had, because we have become less and less powerful, and less and less able to represent our constituents. We talk about independence as though it is some kind of formula but, in truth, no one is independent. Everyone brings their baggage with them. If they have no baggage, it is almost certain that they have very little judgment. So we are starting off in a difficult set of circumstances. The rise and rise of the quangocracy will be supported if the motions are agreed tonight.
	A colleague has suggested that we should think, review and reflect once more about this post. Let us imagine for a moment what our purpose in life is. It is to make a difference through the decisions that we make here in the House, but we have contracted them out, privatised them and given them to quangos. The person who wants to do this job is not the person who should get it. As Groucho Marx once said, I don't care to be a member of any club that would have me as a member. More seriously, I shall give the House the example of a friend of mine who was a police officer. He was recruiting marksmen, and he told me that he never once accepted a volunteer. He always preferred to recruit them in a different way, because it was dangerous for volunteers to be police marksmen.
	As other hon. Members have said, the establishment of the Electoral Commission has not led to more people voting, or to young people getting more excited about politics. Nor has it led to any greater respect for people in this House. Things have got worse, not better. Is there a correlation? Well, no, because the Electoral Commission is pretty unimportant as a body. It has done nothing worth talking about, barring getting into the headlines from time to time to drag hon. Members over the coals for failing to report something on time. Those are peccadillos as far as the general public are concerned.
	When I mentioned to the hon. Member for North Southwark and Bermondsey (Simon Hughes) that anyone could do the job, my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) said that not everyone in his constituency could do it. I have to tell him, however, that a good many could. It is a non-job; it is not terribly important to anybody outside this place, and we are navel-gazing again if we think that it is. As for the idea that we should pay someone 167,000 a year to do the jobwhat an affront! It is an affront at a time when people are losing their jobs hand over fist, often through no fault of their own. However, we could trace the blame for this to the people who are paid that kind of money, and more, and who have made an awful mess of the companies that they are supposed to be running. We are getting into a similar mess with this job. It is simply not worth it.

Gordon Prentice: I simply disagree with my friend. This is a crucial part of a proper, functioning democracy. We need an Electoral Commission to police the system. I am sorry to have to say this to him, but he is completely wrong.

Ken Purchase: My hon. Friend and I have a fundamental philosophical disagreement about this job. I am in favour of a democracy that functions properly and has proper elections in which people are voted in and voted out. It does not need policing, other than by this place. This is where these things should be decided.
	I can almost trace the beginning of this nonsense of putting everything out to the private sector and to quangos. It was when two Conservative MPs took money for asking questions and the then Prime Minister did not appear to have the courage to say to his Whips, Deal with them. We set up an inquiry and ever since we have had all these quangos and nothing is ever done in a proper way as the Whips would want [Interruption.]

Simon Hughes: So the hon. Gentleman thinks that we do not need any legislation or any regulation to deal with how much money can be given in donations and what funding is permissible. Is he saying that nobody is needed to police those matters, that the majority party will always get its way and that we can trust democracy to a majority party? He must be living on another planet.

Ken Purchase: Well, isn't that a giveaway: We can trust democracy. Not he said. Oh no, we cannot trust democracy. Of course we can [Interruption.] Look, if the great Winston Churchill decided that out of all the systems, democracy was the least worst, I am prepared to go along with it. What I am not prepared to do is continually undermine the power and strength of this House by giving it away to unelected people in quangoland who, if they had any respect for this place, really should not be doing these jobs at all. It seems to me that we have to be proper, right and judicial in this House in setting down the rules. If that fails, then we have the police. If it is felt that people have acted unlawfully, refer it to the police; do not go through this nonsense where these people spend 12 months testing out a decent Member of this House only to decide that there is no case to answer. We should do it in the right way to begin with. I shall support the amendment this evening and I sincerely hope that we reflect on all this business of quangoland before we make any further appointments.

Chris Bryant: This is the vote before Christmas, so I shall not seek to delay the House too long. The Government support the motion, ably moved by the hon. Member for Gosport (Sir Peter Viggers), speaking on behalf of the Speaker's Committee. We are grateful to all those who have taken part in this decision.
	I would like to pay my personal tribute to Sam Younger. I used to work with him at the BBC; I have known him for several years and know him to be an honourable and upright man who has performed his tasks with a great deal of probity. There were many occasions on which I profoundly disagreed with what he and the commission had said and done, but I none the less think that there are times when having such an element of grit in the political democratic system is important, especially if we are to maintain brightly the pearl of democracy.
	From what I have read in the report presented in July, I believe that Jenny Watson is an able person who has the kind of track record that would recommend her for this post. She was chosen unanimously by a panel nominated by Mr. Speaker, chaired by Baroness Fritchie of Gloucester and including a representative of the Office of the Commissioner for Public Appointments. Although there has been some criticism of the process of appointment, I would not want to echo it, although I will come to the issue of remuneration in a few moments.
	Jenny Watson is the former chair of the Equal Opportunities Commission and a non-executive board member of the Audit Commission. It is good that she has shown a degree of commitment to public service, which my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) mentioned earlier, and it will enable her to enhance the role of the Electoral Commission. As is required, the leaders of all the political parties in the House were consulted and none raised any objection to the appointment, so I think that it is a good one.
	Several hon. Members raised the issue of remuneration for the chair of the Electoral Commission. It would have been wrong for us to propose voting on 150,000 this evening and I pay tribute to Jenny Watson for taking the very significant pay cut that was proposed to her some time after she was offered the job.

Bob Spink: Surely the Minister is not telling the House that if I had not tabled an amendment to reduce the remuneration from 150,000 to 100,000, the House would not simply have allowed it go through on the nod. If he is telling that to the House, he is being disingenuous.

Chris Bryant: I hope that the hon. Gentleman will one day do the sensible thing and swap sides of the House. He has many miraculous powers, but making the Government change their mind is not normally one of them.
	I think it right that a more sensible proposition is before us tonight. For my part, I would have found it very difficult to recommend to my constituents a dramatic increasewhich this would have representedfrom the pay that Sam Younger currently receives to that which Jenny Watson would have received had it been 150,000 for three days a week. I therefore feel that we should pay tribute to her, not least because if we voted against her appointment or her remuneration tonight it would show a degree of lack of grace on the House's partgiven that a Committee of the House produced the recommendation and made her an offer which she acceptedto choose to turn down the recommendation of a report presented to us 22 weeks later. I think that that would be unfair to the lady concerned.

Ken Purchase: My question is simple. Will my hon. Friend tell us how much she receives for doing her other job, and for how many days a week she is engaged in it?

Chris Bryant: I think that the hon. Member for Gosport (Sir Peter Viggers) will be able to enlighten my hon. Friend. I shall merely say that I feel that it would be ungracious of us, at this point, to turn down the nomination.
	Let me finally express the hope that, in the job that I hope she will be taking on, Jenny Watson will examine one issue that particularly affects hon. Members: the fact that at present we must report donations, gifts, travel and hospitality to both the Electoral Commission and the Register of Members' Interests. A one-stop shop is long overdue, and I hope that the commission will not be as recalcitrant and difficult in that regard as I have found it to be of late.

Peter Viggers: With the leave of the House, Mr. Deputy Speaker.
	In response to the last comment made by the Deputy Leader of the House, I should point out that it was the House that created the regulations that annoy us all so much, and that it would be for the House to change them if the Electoral Commission were put in a position in which it did not have to require duplicate registration.
	There have been some calls for a broader discussion about the Electoral Commission, and I for one would welcome that. The only full discussion we have had on the subject was one that that I instituted by asking for a debate on the Consolidated Fund. I have been asking Ministers for Government time for such a debate, because there are indeed many issues to be discussed.
	The main purpose behind the creation of the commission was to promote participation and confidence in the electoral process, and we know what has happened over the past 10 years. It may well be that acceptance of the commission's proposal for individual voter registration would help to put right some of the things that have gone wrong in the past 10 years, so we need a more general debate. I would welcome a more general debate on appointments and salaries for similar reasons. However, we are not here this evening to talk about that. We are talking about the appointment of a chair of the Electoral Commission, and the remuneration that that chair should receive. The Electoral Commission does exist, and until the House abolishes it, there it is. It needs a chair; it needs to be properly led. That is what we are discussing.
	As for the appointment process itself, I absolutely reject the criticism that the selection process was not properly conducted or considered. It was rigorous, it was scrupulous, and it was properly conducted in every detail. I am proud to be associated with it.
	The remuneration was also carefully considered. Our starting point was the 11th report of the Committee on Standards in Public Life. We did not start by asking, How much should we give Jenny Watson? We started by listening to the Committee, reading its 11th report, and noting its call for a refocusing on the part of the Electoral Commission and its demand for leadership and direction from the commission. On that basis we consulted, discussed and asked about the terms and conditions that we would need to offer in order to recruit the very best candidates. We managed to reduce 37 candidates to five and then to four, we interviewed them all, and I am confident that we chose the best. We went into the process with our eyes wide open, knowing exactly what we were seeking to do. It was on that basis that we decided that the right salary was 150,000 a year for a three-day week.
	We are, of course, talking about March 2008. The world has changed since March 2008, but when the proposal was made, it was to meet the wish of the Committee on Standards in Public Life. I draw the House's attention to the fact that the motion proposing a salary of 150,000 a year for a three-day week carried the words Queen's recommendation signified, meaning that it was acceptable to the Treasury.

David Taylor: The hon. Gentleman said that the Committee discussed, and consulted widely on, the level of remuneration. Can he briefly say who was consulted and how wide the consultation process was?

Peter Viggers: I am unsure whether the hon. Gentleman was present earlier in the debate. All the detail is in the first report of the Speaker's Committee; we pointed out there just how wide that consultation was. I was a participant in all stages of the process and it was, indeed, wide.

Simon Hughes: The hon. Gentleman has done an excellent job. Can he just tell us why it has taken so long from the time his Committee came to a view and made a proposal for there to be this debate in the House?

Peter Viggers: My reply is that the hon. Gentleman should ask the Government. It is the Leader of the House who tables motions. We considered it to be very important that we reach our conclusion on the appointment in June of this year and it has taken until now; the responsibility for that lies squarely with the Leader of the House.
	The hon. Member for Castle Point (Bob Spink) claimed credit for reducing the proposed salary from 150,000 to 100,000. Having been engaged in this process, I have to tell him that although we noted his contribution on the Order Paper, he cannot claim credit for that. It was a matter decided by discussion and consultation.

Ken Purchase: Will the hon. Gentleman give way?

Peter Viggers: I am sorry, but I will not do so as I have only one minute left.
	I am not a natural friend of quangos, but the fact is that the House created the Electoral Commission, and it is important that it should be properly led and directed. I am confident that the appointment of Jenny Watson is the right one, as is the salary proposed for her. Her preparedness to accept a lower salary than the one for which she applied is a noble indication of her public service. I commend the order to the House.

Bob Spink: On a point of order, Mr. Deputy Speaker. Although the two motions have been taken together, would it be possible to vote on each of them separately if necessary?

Mr. Deputy Speaker: Yes, of course.

Kate Hoey: Further to that point of order, Mr. Deputy Speaker. Many of us who would like to support the appointment of a chair of the Electoral Commission but who do not want to support the salary would very much like to have a separate vote.

Mr. Deputy Speaker: Order. Well, I hope I have cleared that up. Two Questions will be put.
	 Question put and agreed to.
	 Resolved,
	That an humble Address be presented to Her Majesty, praying that Her Majesty will appoint Jennifer Watson to the office of chairman of the Electoral Commission with effect from 1 January 2009 for the period ending on 31 December 2012.

Electoral Commission (Remuneration of Chairman)

Queen's recommendation signified.
	 Motion made and Question put,
	That the following provision shall be made with respect to the remuneration and expenses of the Chairman of the Electoral Commission (the chairman):
	(1) In respect of remuneration for service between 1 January 2009 and 31 December 2009, the chairman shall be paid 100,000.
	(2) In respect of the year starting with 1 January 2010 and in respect of any subsequent year starting on the anniversary of her appointment, the chairman shall be paid as remuneration for that year the sum payable during the immediately preceding year increased by the same percentage of that sum as the percentage (if any) or total of the percentages (if more than one) used to 10 increase the salary of a High Court Judge during that immediately preceding year.
	(3) Where during any of the years referred to above the chairman ceases to hold that office, the sum to be paid to her in respect of the part of the year for which she held office shall be such proportion of the sum which would have been due had she completed that year in office as reflects the portion of that period during which she held the office of chairman.
	(4) The chairman shall be reimbursed for any expenses she incurs in connection with the discharge of her duties as chairman on travel, accommodation and subsistence.
	(5) The pension of the chairman shall be calculated broadly by analogy with the pension scheme of the staff of the Commission, thereby delivering a pension based on the Principal Civil Service Pension Scheme. (Sir Peter Viggers.)
	 The House divided: Ayes 324, Noes 32.

Question accordingly agreed to.

Business without Debate
	  
	Delegated Legislation

Mr. Deputy Speaker: With the leave of the House, we shall take motions 11 and 12 together.
	 Motion made, and Question put forthwith (Standing Order No. 118(6)),

Housing

That the draft Local Authorities (England) (Charges for Property Searches) Regulations 2008, which were laid before this House on 13 November, in the previous Session of Parliament, be approved.

Children and Young Persons

That the draft Safeguarding Vulnerable Groups Act 2006 (Prescribed Criteria and Miscellaneous Provisions) Regulations 2008, which were laid before this House on 12 November, in the previous Session of Parliament, be approved.  (Helen Jones.)
	 Question agreed to.

European Union Documents
	  
	Management of EU Funds in Bulgaria and Romanian and Bulgarian EU Accession .

Motion made, and Question put forthwith (Standing Order No. 11 9 ( 11 )),
	That this House takes note of European Union Document No. 12244/08, Commission Report: Management of EU funds in Bulgaria, and supports the Commission's decision to suspend funding while action is taken by Bulgaria to ensure sound financial management; further notes European Union Documents Nos. 12177/08 and Addendum 1, and 12182/08 and Addendum 1, Commission Reports on progress in Romania and Bulgaria under the Co-operation and Verification Mechanism; and welcomes this ongoing post-accession process to support essential reforms in both countries to meet their EU membership commitments. (Helen Jones.)
	 Question agreed to.

PETITIONS

Pharmacy Services (Gloucestershire)

Geoffrey Clifton-Brown: In April, the Government produced a White Paper entitled Pharmacy in England: Building on Strengths. In response to that White Paper, the Dispensing Doctors' Association carried out a survey of 6,000 of its patients. It had two key findings. The first was that 95 per cent. of the surveyed patients would find it difficult or inconvenient if their surgeries stopped dispensing. The second was that half of the surveyed households include at least one person over 65. It was unsurprising, therefore, that hundreds of my constituents wrote to me to oppose the proposals.
	In a very welcome announcement yesterday, the Minister of State, Department of Health, the hon. Member for Corby (Phil Hope), did a complete U-turn on the proposals and announced that there would be no change. My constituents, along with the millions of people up and down the country who were upset by the proposals, have had an early Christmas present. My constituents have therefore had a prescient victory in their campaign, but nevertheless I shall present their petition.
	The petition states:
	The Petition of residents of Cotswold and others,
	Declares that the Government has made proposals to change the way pharmacy services are provided in the community; further declares that if the proposals were implemented, the dispensaries at the Moore Health Centre in Bourton-on-the Water and Westwoods Surgery in Northleach would be forced to close; notes that the undersigned value the service currently provided.
	The Petitioners therefore request that the House of Commons urges the Secretary of State for Health to retain the dispensaries at the Moore Health Centre in Bourton-on-the-Water and Westwoods Surgery in Northleach.
	And the Petitioners remain, etc.
	[P000299]

Dangerous Drivers

John Smith: Thank you, Mr. Deputy Speaker, for giving me the opportunity to present a petition signed by almost 25,000 people on the topic of the horrendous, appalling and often tragic consequences of drink-driving. It is particularly pertinent now with Christmas so close.
	The petition states:
	The Petition of the family of Aaron Palmer and concerned residents of Vale of Glamorgan and others,
	Declares that there should be justice for families of the innocent people who have been killed or injured by drunk drivers; such as 18 year old Aaron Palmer who was knocked down by a drunk driver and killed on Boxing Day 2003. The Petitioners further declare that those found guilty of drink driving should risk having their driving licences permanently revoked.
	The Petitioners therefore request that the House of Commons urges the Government to consider bringing forward legislation to ensure that drink drivers who have recklessly killed someone in a crash have their driving licences permanently revoked.
	And the Petitioners remain, etc.
	[P000301]

Health Services (Wycombe)

Paul Goodman: I rise to present a petition, the contents of which are self-explanatory and require no elucidation by me.
	The Petition of over fourteen hundred readers of the Bucks Free Press newspaper,
	Declares that the Prime Minister should honour his pledge to listen to newspaper campaigns and the voice of the people and order a review of changes to services at Wycombe Hospital.
	The Petitioners therefore request that the House of Commons urges the Prime Minister to order such a review.
	And the Petitioners remain, etc.
	[P000293]

Cervical Cancer Screening

Motion made, and Question proposed, That this House do now adjourn. (Helen Jones.)

Fraser Kemp: Thank you, Mr. Deputy Speaker, and I am grateful to Mr. Speaker for giving me permission to hold this debate on the Floor of the House of Commons.
	I shall begin by praising the success over the past few decades of the cervical cancer screening programme, and all those who have worked in it. They have saved many lives but, despite that success, cervical cancer still kills 1,100 women every year. Another 2,800 women are diagnosed with it each year, but I want to speak specifically about the screening of young women under the age of 25.
	I bring this matter to the House because a young constituent of mine called Claire Walker tragically died on 18 September, a few days after her 23rd birthday. Claire was diagnosed with cervical cancer at the age of 21, and she died leaving a two-year-old son, a husband, a brother, a sister, a mam and dad, and a grandma. Claire worked at the Washington child benefit centre, where I once worked, as did her mother. I remember when I was the trade union branch secretary 30 years ago that, along with many others, I negotiated for on-site screening for the 2,000 women who worked there. That was one of the first such initiatives anywhere in the UK.
	Despite having this devastating illness, as well as a young family to care for and all the pressures that that brings, Claire Walker found the courage and determination to help others, even in her dying days. She found the strength that she needed through Jo's Trust, a charity that helps support cervical cancer sufferers, and she also took part in television programmes and appeared in women's magazines and in newspapersalways with the aim of warning others of the danger, and to provide help and support.
	On the day of her funeral, her dad Bob said, She will always be the real angel of the North. She was a remarkable woman, whose family and friends are determined that her death should not be in vain. They have campaigned courageously and vigorously about the need for cervical screening of women under 25. They have had the support of many in the local community in Washington, and a petition was organised by the  Sunderland Echo to ensure that other families do not have to go through what they have faced. Claire would have had that screening had she been born a few years earlier, or 80 miles up the road and over the border in Scotland.
	Many women under 25 are still diagnosed with cervical cancer each year. The latest figures that I could get from the Office for National Statistics only go up to 2005, but they show that the number of women so diagnosed totalled 42 in 2001 and 2002, 63 in 2003, 48 in 2004 and 43 in 2005. They were all young women diagnosed under the age of 25, and many health professionals believe that the figures could be much higher.
	In 2004, the routine screening age in England was raised from 20 to 25. Scotland and Wales did not raise the age. The reason given at the time was the report issued by Drs. Sasieni and Cuzick and colleagues, which the Department of Health considered. However, many feel that the data sample used in the report was relatively smallabout 3,700given that 4.3 million women a year are eligible for screening. There are differences of view within the medical profession and I shall give a couple of examples.
	A report recently published in the  Journal of Family Planning and Reproductive Health Care stated:
	Women aged 20-24 years should no longer be given the message that screening causes more harm than good and should not be actively discouraged from screening.
	In the same journal, Professor Fiander, in an article entitled Cervical screening in young women aged 20-24 years, wrote:
	The paper by Sasieni and colleagues demonstrated less protection for younger women from a normal cervical smear than for older women and paved the way for an increase in the age of first invitation for cervical screening in England. Sasieni's study did not include microinvasive cancers, for which fertility-sparing options for treatment may be feasiblean advantage of early screen-detected tumours. If we accept that protection from current cervical screening is poor in young women then perhaps the response to this should not have been to start screening later but to find a better method of screening young women.
	Another article dealing with lowering the age concluded:
	Delaying the age for screening eligibility carries a risk of CIN becoming more extensive, and therefore more difficult to excise, as well as a risk of progression. The NHSCSP should reconsider its decision and encourage young women to be screened, not excluding those aged 20-24 years. Facilities for taking the test should be made more convenient. Women should be informed that low-grade CIN is potentially reversible and may safely be monitored. Cervical screening also provides an opportunity for education on healthy lifestyles and safer sex while treatment should be reserved for high-grade CIN.
	There are differences of opinion and the view expressed in the report considered by the Department is not universally shared by the English medical profession, by the chief medical officers in Scotland and Wales, or in a host of other European countries. That view has not been taken in Australia and many other parts of the world. Many people feel that the report did not look at interval analysis and that it was not designed to test the theory it used and the conclusions it reached.
	Many people feel that responsibility for the burden of proof lies with those who advocate change, yet many of us feel that the case is not proven. I have talked to people in the profession over the past few weeks and many consultants and others accept that there was an element of over-treatment, but they say that the pendulum has swung the other way and there is a change of attitude in the medical profession. Some of the arguments about over-treatment are no longer made.
	The argument has been used that early screening does more harm than good, but, with greater safeguards, why should it be different for a 24-year old or a 25 or 26-year old? As my quotes from eminent medical journals showed, that argument sends out the wrong messagethat cervical cancer does not affect young women. Between 2000 and 2005, the number of women aged between 20 and 29 who turned up for routine screening went down from 77 per cent. to 71.6 per cent.
	I readily accept that I am not a medical expert, but I have talked to the families and to people in the profession. I feel confident that a case needs to be answered and that an analysis needs to be performed. I have been a Member long enough to recognise that the Minister will not stand at the Dispatch Box and say, We will alter the procedure and take the age back to 20, but I ask for recognition that eminent figures in the medical profession have expressed genuine and serious differences of opinion about how we approach the issue, particularly within our neighbouring nations of the UK.
	Obviouslythis is connected in many waysI welcome the recently announced vaccine programme, together with the catch-up initiative, but it will still leave a group of young women who are not covered by routine screening or vaccination. I respect the Minister. She is a former health service professional. She will want to be reassured that what we are doing is absolutely right and in the best interests of young women. I should like simply to put it to her that we should analyse the available data, and that view is supported by other hon. Members. Early-day motion 195, which I submitted, has support from Conservative, Liberal and Labour Members, all of whom feel that this issue seriously needs to be revisited.
	When we look at the data, we see that we have a unique opportunity for the first time. Two different systems have been operating in England and Northern Ireland and in Scotland and Wales. If the argument of harm exists and if damage is done to young women, that would be presumably demonstrated by looking at the data on those young women under 25 who are routinely screened in Scotland and Wales. One way or the other, the argument can now be proved. We can analyse what the difference is, because we have had similar populations with similar genetic make-ups for the past few yearsso there is an opportunity.
	A point that has been made to me is that the data used in the Sasieni report show that big changes have taken place. The age at which young women become sexually active has reduced. Such differences need to be assessed. In my dealings with the Department of Health, it has always argued on the basis of medical advice. Some people have suggested that cost is an issue, but the average cost of screening is between 30 and 40. The life chances that that has given to tens of thousands of women in Britain are quite phenomenal. Apart from the obvious cost-benefit analysisscreening has saved the health service money, as well as greatly benefiting the women who have been helpedto save someone's life is clearly a great advantage. The re-examination needs to take place urgently, on the basis of different age limits, as that will provide a proper opportunity.
	Some people feel that, when the Sasieni report came out a few years ago, the Department considered that other groups were not sufficiently involved. If the Minister is prepared to look at the evidence and data, she will see that the consultation should include other organisations that have a view. I could mention many of them, but I will cite one that has advised me in the preparation of my speech: Jo's Trust, which is a cervical cancer charity. The question that needs to be asked is what is the effective age of the first invitation in order to prevent incidence and mortality in young women in their 20s. That is the basis on which we should approach this issue.
	At the weekend I spoke to Claire's mother Lyn, and she told me of another young woman who, after reading about Claire's story and Claire's death, discovered that she had cervical cancer.
	 Motion lapsed (Standing Order No. 9(3)).
	 Motion made, and Question proposed, That this House do now adjourn. (Helen Jones.)

Fraser Kemp: Let me repeat that I spoke to Claire's mother, Lyn, over the weekend, and she told me the very moving story of a young woman who, after reading about what Claire had gone through and about Claire's death, discovered that she herself had cervical cancer, and she is now receiving treatment for it.
	Even in death, Claire Walker continues to do what she did in life, and that is to help others. With that, I conclude, and I look forward to the Minister's response.

Ann Keen: I congratulate my hon. Friend the Member for Houghton and Washington, East (Mr. Kemp) on securing this extremely important debate. He has demonstrated the work that he did on this subject before he came to this House. The thought and research that has gone into his contribution was obvious for all to hear.
	I would like to start by paying tribute to my hon. Friend's constituent Claire Walker, and her brave battle against cervical cancer. For such a young woman to find herself in that position with a young family is devastating, and hearing of her brave work throughout what was left of her life is something that we must all take very seriously. I hope that during my speech I will address most of the issues that my hon. Friend raised.
	I offer my sincere condolences to Claire's family, her husband and her son. Of course, these sound like just words, but they are heartfelt words, because as a woman, as a mother, as a sister, and as an aunt, I know of the pressures that are on women today to look after themselves, but with the fear and dread of having bad news whenever one goes for screening. Of course, it makes it worse for the family to have this devastation at this particular time.
	The NHS cervical screening programme is a great success, and it is one of the most well-regarded cancer screening programmes in the world. More than 3.5 million women are screened every year, and experts estimate that the programme saves up to 4,500 lives in England alone. However, we cannot be complacent, of course, and we are always striving to improve the programme.
	Following the evaluation of a Government-funded pilot study of liquid-based cytologyLBCthe National Institute for Health and Clinical Excellence concluded in 2003 that this new technology should be rolled out across the country. I am pleased to say that the whole of England had converted to LBC by October 2008, as planned. Prior to the introduction of LBC, rates of inadequate samples were over 9 per cent. This resulted in about 300,000 women a year being screened again, just because their initial sample could not be read. As LBC was rolled out, the rate of inadequate samples has fallen every year and is now at a record low of just under 3 per cent., or fewer than 100,000 women. That means that 200,000 fewer women a year do not have to have a repeat test because their original sample could not be read, with all the anxiety that ensues for those women and the extra costs to the service. It is important to put this on the record because it is a good and welcome change.
	The implementation of LBC also allowed us to modernise the programme in other ways. Prior to 2003, there was a longstanding inequality in the NHS cervical screening programme regarding the frequency of invitations for screening. Some local programmes invited all women every three years, some all women every five years, and some used a combination of the two intervals, but there was no clear evidence base. The Advisory Committee on Cervical Screening had always kept the issue under review and commissioned research to find robust evidence to show what was the optimal screening interval. The research, by Sasieni et al., was published in the  British Journal of Cancer on 1 July 2003. That research recommended that women aged under 25 should not be screened, as the risk is so low that there may be more harm done than good. It recommended that women aged 25 to 49 be screened every three years, and women aged 50 to 64 every five years.
	The Advisory Committee on Cervical Screening carefully considered the research at its meeting on 14 July 2003 and advised that the recommendations in the research be adopted across the NHS screening programmes, but I certainly appreciate my hon. Friend's comments about the fact that the screening programme in Scotland is offered to women between the ages of 20 and 60. However, I would like to give him details on why it was decided to raise the screening age in England from 20 to 25.
	Cervical cancer is very rare in women under 25. Claire's case is of course tragic, but thankfully it is very rare. All screening programmes must do more good than harm. However, research presented to the Advisory Committee on Cervical Screening, coupled with 15 years of experience of screening, has shown that screening women under the age of 25 may do more harm than good. Women under 25 often underwent unnecessary investigations after results suggested that they appeared to have cervical abnormalities. They were, in fact, normal cervical changes, caused by hormonal changes that will normally resolve themselves naturally over time without the need for treatment.
	Back in 2003, when the policy was changed, the 9,000 women under 25 with a high-grade smear whom we sent each year for colposcopy would all be treated, and ran the risk of complications that could lead to infertility. Treatment relating to colposcopy using large-loop excisionthe most common procedureis relatively safe, but there are risks. The short-term risks include pre-operative and post-operative bleeding and secondary infection. It is possible to perforate the uterus and/or cut through the vaginal wall, which may lead to unintentional damage to the bowel or bladder. In the longer term, cervical stenosis, or narrowing, can be a problem, and occasionally there is functional damage that leads to problems with pregnancy. I am explaining the technicalities to show the extent to which the research was looked into.
	With young women, there is the possibility of repeated loop excisions. That is not uncommon, and it means that the risk of complication is greatly increased. There is significant bleeding in 5 to 10 per cent. of cases in which a cone biopsy is necessary, and cervical stenosis occurs in 2 to 3 per cent. of patients. Hysterectomy is occasionally necessary to delay excessive bleeding, and there are arguments about the rate of fertility issues.
	Since the policy was changed in 2003, the number of excisional biopsies undertaken as a consequence of the screening programme has fallen by almost 4,000. In 2006, there were only 56 registrations, representing 2.4 per cent., of cervical cancer in women aged under 25, compared to a total across all ages of 2,321 registrations. There were no deaths from cervical cancer among those aged under 25 in 2005, according to the latest figures available to me from the Office for National Statistics; that varies slightly with what my hon. Friend said. Recent work by the National Cancer Intelligence Network, based on figures from cancer registries, shows that no increase in registrations of cervical cancer has been evident in the overall England data for that age group since the frequency policy was changed in 2003.
	Screening women from the age of 25 helps reduce the number of unnecessary investigations and treatments in younger women. Treatments to the cervix can cause difficulties later in life, such as raising the risk of pre-term babies if a woman becomes pregnant. That, of course, will affect two lives, not just one.
	There is internationally agreed evidence that women should be screened from age 25. A meeting in Lyons in May 2004, organised by the International Agency for Research on Cancer, part of the World Health Organisation, concluded that organised and quality controlled cervical screening can achieve an 80 per cent. reduction in the mortality of cervical cancer. Women aged 25 to 49 should be screened no more than every three years, and women aged 50 to 64 no more than every five years. The group that made these recommendation consisted of 26 experts from 14 countries.
	Although some countries, including Scotland, still invite women under 25 for cervical screening, others, such as the Netherlands and Finland, do not start screening until the age of 30. The advisory committee on cervical screening constantly keeps the age range and frequency of cervical screening under review, but would formally review this policy only if there was new evidence that we should be screening from age 20. Ultimately, the NHS in England should not be paying GPs for a procedure that can potentially be harmful.

Fraser Kemp: Earlier in the Minister's contribution, when she referred to the advisory committee, she used the word may cause harm and she has also said can cause harm. I am worried that there does not appear to be a definitive view. That is why I would like the Minister to look at the evidence. Can and may can be made definitive if we examine evidence in Scotland and Wales.

Ann Keen: I thank my hon. Friend for that intervention. I will come shortly to the important issue that he raises.
	Women under 25 who are concerned about their risk of developing cervical cancer or concerned about their sexual health should contact their GP or their genito-urinary medicine clinic and go for screening. Clinicians will refer women under 25 who have symptoms of cervical cancer for other more appropriate tests, and women with suspected cancer should be seen by a specialist within two weeks.
	My hon. Friend mentioned our HPV vaccination programme, which we are proud of. Cervical screening is not our only strategy for tackling this dreadful disease. The HPV vaccination programme, which protects against two strains of HPV that cause more than 70 per cent. of cases of cervical cancer, commenced in September 2008 for young girls aged 12 and 13. The national vaccination programme against HPV has been extended to offer protection to an additional 300,000 girls aged 17 and 18 from September this year. A catch-up programme will commence in September 2009 and will offer the vaccine to other older girls aged 13 to 18. The introduction of the vaccine will help reduce the number of tragic cases like that of Claire, whom we are discussing tonight.
	I want to reassure my hon. Friend that the evidence has to be looked at again. Yes, everything that he has raised in the debate tonight has to be looked at again. Jo's Trust was mentioned. If my hon. Friend feels that that is important, I would want to include any work that Jo's Trust has done and any evidence it has produced.

Fraser Kemp: I thank my hon. Friend for giving that commitment to look at the evidence that has been produced and for the commitment to involve some of the charities. That will give great satisfaction to many people who are concerned about the matter. I genuinely welcome the commitment that my hon. Friend has given from the Dispatch Box.

Ann Keen: I thank my hon. Friend again. He has introduced this issue tonight, Claire's family are involved and Claire had committed to continue to campaignif we in the House and our debates mean anything, it is our duty to look at the evidence again. I thank all the charities and organisations that have been involved in bringing such detail to our attention and I recognise why the research was acted on as it was. It is always right to look again when issues are introduced as my hon. Friend has introduced this one. I give a commitment to keep a very close eye on the issue and will keep my hon. Friend informed of progress.
	 Question put and agreed to.
	 House adjourned.

Deferred Division

Adjournment (Christmas)

That this House, at its rising on Thursday 18 December, do adjourn till Monday 12 January 2009.
	 The House divided: Ayes 266, Noes 214.

Question accordingly agreed to.